Key Takeaways Business-friendly government Strategic geographical location Preferential market access Human resource Quality of life  Foreign investors are increasingly taking notice of the investment opportunities in Cambodia, as evidenced by the recent surge in FDI. The country has successfully overcome past challenges, including decades of conflict, and achieved stability, resulting in sustained and robust economic growth in recent years. European businesses that invest in Cambodia, which has been suggested by The European Chamber of Commerce in Cambodia, will enjoy a range of favorable conditions. BUSINESS-FRIENDLY GOVERNMENT  The Government of Cambodia is business-friendly and recognizes the importance of foreign direct investment (FDI). It is making efforts to promote investment and attract foreign businesses to the country. There is a non-discriminatory policy for foreign-owned companies, with only a few restrictions on foreign ownership and no legal constraints on establishing 100% foreign-owned companies across most sectors, excluding ownership of land and certain niche areas. The government is open to communication with the private sector through platforms such as the Government-Private Sector Forum and regular consultations for new legislation. Cambodia also has a low tax regime, with a corporate income tax rate of 20%, one of the lowest in Southeast Asia. To encourage FDI, the government offers incentives via the Qualified Investment Project (QIP) scheme, which offers tax holidays and special depreciation allowances, customs duty exemptions, and VAT exemptions for businesses located in Special Economic Zones (SEZs). There are over 50 SEZs established, mostly near border areas and manufacturing hubs, providing infrastructure and administrative benefits to businesses. Repatriating profits is also easy in Cambodia, with no restrictions on foreign exchange operations and remittance of profits. The government has also been implementing reforms to improve the ease of doing business and the investment environment, such as reducing fees for imports and exports and modernizing public services. STRATEGIC GEOGRAPHICAL LOCATION Cambodia is strategically situated in the heart of Southeast Asia and shares borders with Thailand, Lao PDR, and Vietnam. It is also positioned at the center of the Southern Economic Corridor in the Greater Mekong Subregion. This has led to increased access to regional markets and the expansion of air connections to other ASEAN and East Asian countries. The Phnom Penh International Airport provides direct flights to major regional cities such as Beijing, Shanghai, Guangzhou, Taipei, Tokyo, Seoul, Qatar, and the UAE. The government, with the help of international donors and private sector partners, is prioritizing the development of transport infrastructure to enhance Cambodia’s connections with the surrounding region and increase competitiveness. This favorable location makes Cambodia an ideal “+1 market” for companies already operating in the region. PREFERENTIAL MARKET ACCESS Cambodia has embraced free-market values and has become an integrated member of international markets by joining the World Trade Organization (WTO) in 2004. As a “least developed country,” Cambodia has received preferential treatment from key export markets, including the US and the EU, which grant the country duty-free and quota-free access to their markets for many products. The US expanded its trade preferences under the Generalised System of Preferences (GSP) in 2016 to cover 5,000 products, including travel goods. However, the EU’s “Everything but Arms” scheme has been modified as of August 12, 2020, and affects 20% of Cambodia’s export products, including garments and footwear. Despite this, Cambodia can still enjoy duty-free and quota-free access to the EU for 80% of its exports. The country became a member of the Association of Southeast Asian Nations (ASEAN) in 1999 and is part of the ASEAN Free Trade Area (AFTA), which allows for reduced or eliminated tariffs on manufactured goods among its ten member states. Cambodia has also signed the Regional Comprehensive Economic Partnership (RCEP) agreement with ASEAN member states and major Asia-Pacific economic partners and has its own bilateral free trade agreement with China and the Cambodia-Korea Free Trade Agreement. HUMAN RESOURCES The demographics in Cambodia are favorable, with a growing population that is becoming more educated. Over the next several decades, the country is expected to experience a 25% increase in its working-age population. Cambodia’s employment rate is high, with 83% of the population working. In 2018, data from the International Labor Organization showed that the majority of employment in Cambodia is in medium-skilled positions, such as clerical, service, and sales workers, as well as skilled agricultural and trade workers. The Ministry of Labor and Vocational Training allows foreign workers to be hired for managerial or technical positions if the necessary skills are not available within the domestic workforce QUALITY OF LIFE Investors who choose to do business in Cambodia will enjoy a high quality of life with low living expenses and opportunities to experience the country’s rich culture and beautiful landscapes. The world-renowned site of Angkor Wat steals the spotlight, but there are many other notable areas worth visiting, particularly for ecotourism. The main investment areas of Phnom Penh, Siem Reap, and Sihanoukville cater comfortably to foreigners, with a range of accommodation options, bars, restaurants, and entertainment facilities, as well as good connectivity to other major Asian cities. English is widely spoken in cities, and the people of Cambodia are known to be friendly. Additionally, families will have access to international schools and universities with well-regarded programs. Credit: Z1 NEWS