02 Apr Cambodian Foreign Direct Investment Policy

1. Cambodia’s Law on Investment (1994) established an open and liberal foreign investment regime. All sectors of the economy are open to foreign investment and 100% foreign ownership is permitted in most sectors. In a few sectors, foreign investment is subject to conditions, local equity participation, or prior authorisation from authorities. The Cambodian government has prioritised foreign investment in the export sector and has a relatively pro-investor policy and legal framework.
2. Cambodia has no restriction on foreign ownership of companies and boasts a number of incentives such as a corporate tax holiday of up to eight years, a 20% corporate tax rate after the incentive period ends, duty-free imports of capital goods and no restrictions on capital repatriation.
3. Under the Law on Investment (1994), foreigners are restricted from owning land but are allowed to hold long-term leases for up to 50 years, renewable for another 50 years, as well as freehold ownership of specified condominiums.
4. The most-popular sectors for foreign investment include garment manufacturing, agriculture, the services industry and tourism (which is one of Cambodia’s key growth areas). The country’s biggest investors tend to come from within the Asia region, with mainland China, Malaysia, Vietnam and Thailand being major sources of foreign investment, together with the United States.
5. Cigarette manufacturing, movie production, rice milling, gemstone mining and processing, publishing and printing, radio and television, wood and stone-carving production and silk-weaving are some of the sectors that are subject to conditions such as local equity participation, or prior authorisation from authorities.
6. FDI plays a critical role in the Cambodian economy. Based on 2017 data (the latest available), FDI stocks are equivalent to 94.1% of the country’s GDP, with only three other countries in the region having higher ratios.

Sources: WTO – Trade Policy Review, KTDC, Council for the Development of Cambodia, United States Department of Commerce, Fitch Solutions