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Nov 19, 2011

Doing Business in Cambodia: Incentives, Stable Government, and Low-Cost Labor

1.  Competitive investment incentives
The promulgation of new investment laws in Cambodia means that Cambodia now offers the best business incentive package in Southeast Asia; making the Kingdom's outward-looking economy a very attractive place to invest. The following are the highlights of the new Cambodian investment laws:  
  • 9% corporate/income tax
  • Tax holidays of up to 8 years
  • 5 year loss carried forward
  • Full import duty exemption
  • No withholding tax on dividends
  • Free repatriation of profits
  • No nationalization and price controls
  • No discrimination between foreign and local investors
  • Land leases of up to 70 years 
2. "Fast-track" investment approval
The establishment of the Council for the Development of Cambodia (CDC) allows investors to deal with just one government body, a "One Stop Service" investment center that provides the speediest approval response in the region.

The CDC provides information and application documents, evaluates and processes investment applications in less than 45 days. The CDC also grants customs duties and tax exemption, registers the company, issues visas and work permits, and facilitates other downstream administrative procedures.  

3. Special Promotion Zones
Industrial Zones are being developed in the capital, Phnom Penh and the main deep-water port, Sihanoukville.  Investment in these zones in Cambodia will qualify investors for additional incentives.  

4. Plentiful supply of labor and natural resources
Cambodia has a population of 9 million people, of which 51% are in the "working age" group.  The labor force is young, high school educated, highly literate, English speaking, hard working and motivated. 

Labor costs are low compared with other Asian countries and natural resources-especially oil and minerals-are only now being discovered.  

5.  Southeast Asia's burgeoning markets are on the doorstep
As part of the Greater Mekong Sub-regional Economic Group, Cambodia is ideally placed to take advantage of the area's fast-developing consumer markets. 

Cross-border movement of goods will further boost trade when Cambodia becomes a member of the Association of Southeast Asian Nations (ASEAN).   

6. International financing for Infrastructure projects
Promises for one billion US dollars in foreign aid have already been made.  Other countries have also vowed aid.  This vote of confidence by the international community has placed Cambodia into the class of one of the more stable nations in the region.

But, just as importantly, since the new government came to power in September 1993, the Kingdom has attracted over 200 million US dollars in private sector investment. 

Build-Operate-Transfer (BOT) projects in Cambodia have been approved for a second international airport and a new power generation plant to serve Phnom Penh. The telecommunications network is being upgraded to meet international standards. Roads, too have been imp roved...the bridge connecting the capital with Highway Six-the road that leads to the Thai border-has been rebuilt and Highway Four connecting Phnom Penh with the main port of Sihanoukville is currently being repaired.   

7. Preferential Trading Status
Cambodia qualifies for the GATT, Generalized System of Preferences (GSP) and this status has already been granted to the Kingdom by the European Union, Japan, Scandinavia, Canada and Australia.
We are also discussing Most Favored Nation Status (MFN) with the United States of America.
We believe Cambodia's free market economy has enormous potential for far-sighted investors. The new investment law is the first step to realizing that potential.