To know why Cambodia is attractive for foreign investment, one needn’t look much further than the Prime Minister who basically said Cambodia is open for business:

 “To ensure a sound macro-economy and political and social stability, the government is open to all investors to do business and invest in the Kingdom.” (Dec 2019 Cambodia’s PM Hun Sen)

Cambodia has about 100,000 expats who enjoy the low cost of living, relaxed lifestyle and Buddhist influence in Cambodia. It also lures many for the myriad of business and investment opportunities with some compelling reasons.

Strong growth and a resilient economy

Cambodia was one of the fastest-growing economies 1998 – 2018. It had an average GDP growth rate of 8% mostly driven by the garment and tourism industries.

According to the World Bank, Cambodia has “… undergone a significant transition, reaching lower middle-income status in 2015 and aspiring to attain upper middle-income status by 2030”.

Leading up to the pandemic, the economy was growing at around 7% with the tourism industry hard hit. The Cambodian economy reportedly weathered Covid better than most and FY2021-22 is predicted to have a growth of around 6%.

Cambodia is a frontier market and, unlike more developed nations, is less dependent on the big economies China, USA and Europe. This has buffered it from many global economic crises over the last 2 decades such as the 1992 financial crisis, 2000’s dot com bubble the 2008 bust.

Government incentives

The Cambodian government takes a very pro-business approach and in 2019 announced a raft of economic reforms designed to attract new business, investment and foreign capital. These included tax incentives, lower freight costs, a reduction in national holidays, new investment tools and Special Economic Zone (SEZ) laws.

Other Foreign direct investment (FDI) incentives include 100% foreign ownership of companies, corporate tax holidays of up to eight years, 20% corporate tax rate after the incentive period ends, duty-free import of capital goods and no restrictions on capital repatriation.

A young and competitive labour force

Around 50% of the Cambodian population are under 25. They are tech-savvy, regular users of social media platforms to communicate ideas and generally impacting on the local culture by opening up new ways into the market. The Cambodian minimum wage is also noticeably lower than in neighbouring countries, making it very competitive businesses wanting to recruit from the plentiful young workforce.

Strategic location with preferential market access

Cambodia is located in the centre of Southeast Asia, bordering Thailand, Laos, and Vietnam. To the global market players, it offers an easy to reach, low-cost manufacturing base and it enjoys a healthy demand for its products. It is also a member of the ASEAN Free Trade Area (AFTA) and benefits from the Common Effective Preferential Tariff (CEPT) Agreement. This means it is able to trade with other members on preferential terms and, sometimes, tariff-free. It is also a member of the WTO and trades with the EU under the ASEAN-EU dialogue.

A rapidly growing consumer class

Rising incomes has given many more people more disposable income and with a young, tech-savvy population, this provides ample opportunities for businesses.

Improving infrastructure

Cambodia’s infrastructure has historically been poor, having been virtually decimated over a period of around 15 years of internal war. However, using foreign aid, the government is developing nationwide network of transport, power and telecommunications routes. The focus is on improving Cambodia’s links with neighbouring countries to boost trade and foreign investment.

Frequently asked questions

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