Cambodia is one of the most potential developing market in South East Asia, many foreign investors in the region has started to spot on this opportunity and start to expanding and doing business in Cambodia. The economy grew at average over 8% in the last decade which mainly driven by expansion in garment sector, construction, agriculture, and tourism. In 2015 and 2016, Cambodia GDP is expected to grow over 7%. Per capita GDP in 2003 was USD 367 and it has almost tripled in 2014 to USD 1,130. As of 2012, the percentage of population living below poverty line was 17.7%, a 3% decrease from 2011.
Doing business in Cambodia
Since Cambodia became the first least-developed country (LDC) to join the World Trade Organization (WTO) in 2004, trade has steadily increased. The United States is one of Cambodia’s largest trading partners. Approximately 33 percent of Cambodia’s total exports are destined for the United States - primarily garment and footwear products. In 2014, Cambodian exports to the United States were valued at US$2.84 billion. For the same year, U.S. exports to Cambodia were US$328 million.
Cambodia tourism sector
Cambodia tourism industry is expanding at the fastest pace led by spectacular cultural attraction of Angkor Wat. In 2015, the Angkor Wat, a UNESCO world heritage site was voted as the best tourist destination in the world by Lonely Planet. It is estimated 4.5 million foreign arrivals in 2014, an increase of 12.5% compared to 2013. Tourism industry has increased more than 20 folds since 1998. It is projected that the international arrivals will reach 7 million annually by 2020.
Doing business in Cambodia - Trade Agreements
In 1995, Cambodia joined International Organization for Standardization (ISO) and also has been part of ASEAN Consultative Committee on Standard and Quality (ACCSQ). It has also signed numerous trade agreements, including the U.S.-Cambodia Trade and Investment Framework Agreement (TIFA) in 2006, which facilitates and promotes greater trade and investment between the two countries and provides a forum to address bilateral trade and investment issues. Cambodia is part of Asian Free Trade Agreement (AFTA) starting from 2015.
Foreign Direct Investment
Agriculture remains the main contribution sector to the economy in Cambodia but garments and tourism industry also grows rapidly. Foreign direct investment has increased significantly since 2004, the total amount approved in 2014 is around USD 264 million mainly from China, Japan, South Korea, Malaysia, Thailand, and Vietnam.
For foreign investors/companies who are doing business in Cambodia, currently the Cambodian government offers generous package of incentives.
- 100 percent foreign ownership of companies
- corporate tax holidays of up to eight years, 20 percent corporate tax rate after the incentive period ends
- duty-free import of capital goods
- no restrictions on capital repatriation
Doing business in Cambodia - Market opportunity
Cambodia offers potential investment opportunities in various sectors including: tourism in both natural and recreational areas; education; construction; household products; agriculture and agribusiness; automotives; energy; retail stores and restaurants; and health care.
Best Prospects in doing business in Cambodia
- Tourism infrastructure and resorts
- Education services
- Architecture, construction, and engineering services
- Household goods and appliances
- Agribusiness and food processing
- Used cars and automotive parts
- Power generation equipment
- Fast food and beverage franchises
- Pharmaceuticals, medical Supplies, and medical equipment
- Health care services
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