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Classification: Confidential (C-3)
Cambodia Pitchbook Trade & Investment Opportunity
Prepared by TMB Analytics
Date: December 2016
-2-
2015 GDP size: 18.2 USD bil (Thai 395.3)
GDP growth: 6.9%(2015) 6.9%(2020F)
GDP per capita: 1,168 USD(2015) 1,609(2020F)
2015 Unemployment rate: 0.4%
Minimum wage per month 128 USD (Thai 274)
Inflation: 1.2%(2015) 3.2%(2020F)
Export toCambodia
Thailand 37%
China 29%
Vietnam 21%
Main Exporters Major Thai Exports(excl gold)
Energy 17%
Vehicle 13%
Machinery 8%
29% 28% 44%
Agriculture
Industry
Services
Source: UN, MOC, BOI, IMF, CEIC, and TMB Analytics
General Info
Size
181,035 sq km
Population
15.6mil people(Thai 68.1)
Economy
GDP Component (2015)
49% 20% 31%
Labor Force (2015)8.0 mil people (50.8% of total population)
FDI (2009-13)
From..China 39%UK 20%Thailand 5%In..Industry 39%Infra 35%Agri 16%
Country Summary
Lower Middle
Used currency
Riel and USD
Income Status
(As of July 2016)(Thai 513,000)
Capital
Phnom Penh(พนมเปญ)
0
400
800
1,200
1,600
2,000
5.5
6
6.5
7
7.5
8
2010 2012 2014 2016E 2018F 2020F
GDP Growth (LHS)
GDP per Capita
(RHS)
0
1
2
3
4
5
6
2010 2012 2014 2016E 2018F 2020F
-3-
Economy: Cambodia Macroeconomic Outlook
Strong Economic Growth
Sources: IMF and TMB Analytics
Stable Inflation Outlook
Inflation Rate
IMF’s forecast
IMF’s forecast
Strong economic growth from
garment exports, real estate, and
construction.
GDP growth is expected to be no
less than 6.5%. This leads to a
continue rise in GDP per capita,
and increasing purchasing power.
Inflation rate, which is a good
indicator of economic stability
and can affect real return on
investment, is expected to be quite stable around 3%.
Wage rate is increasing. Minimum wage standard exists
only in garment and footwear
industry at 140 USD per month.
Nevertheless, there is
uncertainty related to wage policy and labor disputes.
USD%
%
Stable around 3%
26
28
30
32
34
-5
-3
-1
1
3
5
7
2010 2012 2014 2016E 2018F 2020F
-4-
Economy: Cambodia Stability Conditions
Sources: IMF and TMB Analytics
Fiscal Balance (LHS)
Gross Public Debt (RHS)
%GDP%GDP
CA Balance
(RHS)
CA/GDP (LHS)
USD bn%
Current account deficit to
GDP is narrowing, while
international reserve is
increasing and expected to be
around 4 months of imports in 2016,
indicating improvement in external
stability. However, the current
amount of reserve may not be
adequate yet as most transactions are settled in dollar.
Government fiscal deficit is
improving while public debt is
decreasing.
Financial sector vulnerability risk stems from rapid credit growth.
Domestic credit to private sector as
percentage of GDP in 2015 was
standing above 50%. Without well-
designed macroprudential
measures, this could lead to
excessive risk taking or financial crisis.
IMF’s forecast
IMF’s forecast
Current Account is Improving
Healthy Fiscal Position
-2.5
-2
-1.5
-1
-0.5
0
-13
-11
-9
-7
-5
2010 2012 2014 2016E 2018F 2020F
-5-
Ease of Doing Business in Cambodia
Sources: World Bank and TMB Analytics
Ranking
170
139
131
82
78
46
23
Myanmar
Lao
Cambodia
Vietnam
China
Thailand
Malaysia
180
183136
120
7
114124
102
178
72
78
42
37
6882
27109
56
51
23
Starting a Business
Dealing with Construction Permits
Getting Electricity
Registering Property
Getting Credit
Protecting Minority Investors
Paying Taxes
Trading across Borders
Enforcing Contracts
Resolving Insolvency
Cambodia Thailand
Solving Insolvency
Starting a Business
9 steps or 99 days Dealing with
Construction Permit
20 steps or 652 days
Getting Electricity
4 steps or 179 days
Registering Property
7 steps or 56 days
Paying Taxes
40 payments or 173 hours Getting CreditDTF score 85
Protecting Minority Investors
Trading Cross Border
Cambodia Ranked 131th (out of 190) in Ease of Doing Business
!!
Enforcing Contracts
483 days and cost 103.4%
of claim
!
Note: 1) East of doing business is base on 2016 version, released on Oct 2016
Energy, 14%
Vehicle, 10%
+
++
+
++
+
(Others 64%)
10%
100%
40%
30%
70%
Thailand28%
18.9USD bil
5 yr Outlook
SEZ Phase I
• High economy growth and growing
domestic demand
• 2016-20 GDP average growth
= 7.2% (Thai 3.1 )
• Part of AEC Single Market
• Most good tariff reduce to 0%
Source: Ministry of Commerce, Index Mundi, CEIC and TMB Analytics
201510%
201240%
201313%
20146%
Thailand export to Cambodia landscape
TotalEx Growth
Note: 1)In 2015, Thai export 214.1 USD bil, 5.0 USD bil(2.3%) went to Cambodia2)Unless state otherwise, data in this slide is from 2015
Border Export3.1 USD bil
62%
Border
Est.Border Ratio
*The others are by plane and sea
*SEZs Phase I, began developing in 2014
Thai Export to Cambodia
5.0 USD bil
Trat
28% ++
Chanthaburi
12% ++
Ubonratchathani
0.3% -
Surin
2% -
Sakaeo
58% ++
Focus Cluster
Agriproduct
Processing Logistics
SEZ Phase I
Focus Cluster
Logistics Tourism
Though being small in size, Cambodia market for Thai export is growing
Currency
Settlement
60% USD
39% THB
Bev, 6%
Con Mat, 6%
Machinery, 7%
-6-
20158%
201227%
201312%
201415%
Border Ex Growth
Share Growth
FDI landscape and opportunity for in Cambodia
Potential FDI Sectors for Thailand
• Growing economy:
Improving infra and standard of living
• Relatively cheap labor
• Supportive trade agreement:
ASEAN 0-5% tariff rate (by 2018)
• Supportive tax system:
Tax exempted for imports used for export purpose
• Pro investment infra:
Over 15 industrial parks in SEZ
Supportive Investment Environment
Textile( i.e. Yarn, Fabric, Wool)
• Lack of major players, as textile
are mostly imported
Processed Foods
• No.2 in export value
• Lack of major players, as most
are SME
Phnom Penh
Siem Reap Stoeng Treng
Kra Chech
Note: *FDI inflow each year
16% 39% 35% 10%
Agri Industry Infra Tourism
0%
20%
40%
60%
0
2,000
4,000
6,000
2010 2011 2012 2013 2014 2015
Despite investment surge in 2011, FDI value
has been steady around 10% of GDP which has been growing for the past decade.
39% 20% 14% 5%
China UK S.Korea Thailand
By investment countries (2009-13 avg)
By sectors (2011-13 avg)
USDmn % of GDP
FDI* is the main engine of Cambodia growth
Source: Ministry of Commerce, CEIC, Index Mundi, and TMB Analytics
Note: Other potential sectors for TDI includes retail, con mat, construction, power, mining
Retail
Construction/Con Mat
Mining
-8-
Local currency Guide: Cambodia Riel
Source: Bloomberg, IMF, and TMB Analytics
Currency Description
FX Regime & Performances
Name
Regulator
Monetary Policy
Exchange
Rate Anchor
The monetary policy framework
is an exchange rate anchor vis-
à-vis the US dollar
Stabilized
Arrangement
Riel (เรียลกมัพชูา)
National Bank of
Cambodia (NBC)
The currency is soft peg with
US dollar within +/-2% band.
Year-to-date, KHR deprecated
0.55% against USD while most
ASEAN currencies gained
against USD
Spot Forward There is no formal spot exchange
market. Commercial banks and
money changers may buy and sell
foreign exchange at their own rates
Control on Exports and Imports of
Export/Import: imports or export of
Cash exceeding the equivalent of
US$10,000 must be declared to
Customs at border crossings
FX movement KHR and THB against USD
30.50
31.50
32.50
33.50
34.50
35.50
36.50
37.50
3,900
3,950
4,000
4,050
4,100
4,150
Sep-14 Mar-15 Sep-15 Mar-16 Sep-16
USD/KHR USD/THB
↑ KHR weaker↓ KHR stronger
↑ THB weaker
↓ THB stronger
(average price KHR/THB is 117 KHR per 1 THB)
KHR=3927+4THBR^2 =0.03
-9-
Regulations & Benefits for Thai Exporter
Check any quota/restriction on
good exported
General goods: Allowed
Goods affecting security and/or
environment:
Restricted*
Check inspection requirement
(see appendix for exception goods)
Goods value not over 5,000 USD:
No inspection
Goods value over 5,000 USD:
Inspection by Gov Agency**
Pay Import tax according to CIF pricing
0% Raw mat/ necessity
7% Intermediate goods
15% Machinery/equipment
35% Luxury
Declare at Custom on type, origin and
price of goods
Contact bank to facilitate
transaction
AEC Benefit
Inclusion List:
99% tariff exempted
Sensitive List:
Reduce to 5% tariff by 2018
• QIP
• AEC single market (AFTA)
• RCEP (in progress)
• ASEAN-Hong Kong (in process)
Pro
du
cti
on
& G
oo
ds D
elivery
Receive Export Order Payment
1
Production for export
goods. Seek bank advise if
needed.
No FX restriction for
payment in USD or any
other currencies
Path toward
Market Integration
2 3
Sources: BOI, CEIC and TMB Analytics
No Specific production
requirement
-10-Sources: Council for the Development of Cambodia (CDC) and TMB Analytics
Preparation1 Setting Up Business
Check Minimum investment requirement
Determine investment and business form
(see appendix for available entities)
• No minimum requirement
• Require to open account with
Cambodian commercial bank with deposit at least 4 mil riel
Company name reserve and data
disclose
2
Company Registration
Company Stamp Registration
Tax Registration Certificate
Start business
• Reserved name with Company
Registration Department
• Disclose investment data on
Cambodian local newspaper
• Time taken: at least 1 work day (up to MoC)
• Acquire Certificate of
Incorporation from MoC
• Time Taken: 2-7 work days
• Acquire the stamp from MoC
• Time taken 1 work day
• Acquire Certificate from
General Tax Department
• Corporate Income Tax =
20% (as of Mar 16,)**
• Time Taken: 30 work days
• Report to Ministry of Labor
and Vocational Training
for hiring purpose
• Time taken: 30 work days
Determine operation site and period
available
• Contact Ministry of Land Management,
Urban Planning and construction
• Land Lease <= 50 yearsLand Concession <= 99 years Register business for SEZ and QIP
• Council for the Development of
Cambodia (CDC) For QIP*• SEZ administration For SEZ
Regulations for Thai Investors
2.1 2.2
• No local partnership required
Note:
* Qualified Investment Project (QIP), is a government
investment incentive granted for project outside SEZ area
** Profits from oil, gas, and other natural resources is tax at 30%
-11-Sources: Council for the Development of Cambodia (CDC) and TMB Analytics
Benefits for Thai Investors
General Benefit
Investment Guarantee
• Equal treatment regardless of
nationality
• No nationalization policy
• No requirement of local equity
participation
• No price control
• No restriction on FX
• Permanent visa for investors & families
• Employment of foreign expatriate
authorized up to 10% of all employees,
staff and workers
Remittance
• No restrictions on the remittance of
capital/profits
Tax
Tax exempt on repatriation
+ or
Tax Holidays (trigger period +
3years+priority years)
Reduce income tax to 9% for 5 years
(after tax holidays benefit ends)
Import duty exemption
Raw material Machinery for import substitution
purpose
For QIP, benefit is similar to SEZ except
that VAT exemption for re export
purpose is only for agri, machine and
garment business
Business in non SEZ
Business in SEZ
• Either
• Up to 9 years profit tax holiday or
• 40% tax reduce on corporate
revenue
• Import duty exemption for
• Raw material
• Machinery/con mat import for
SEZ and for public interest
• VAT exemption for raw mat/cap good
import for export purpose
• Loss carried forward for up to 5 years
THANK YOU
Disclaimer
This document is issued by TMB Analytics, a division of TMB Bank PCL. All analyses are based on information available to
the public. Although the information contained herein is believed to be gathered from reliable sources, TMB makes no
guarantee to its accuracy and completeness. TMB may have issued, and may in the future issue, other reports that are
inconsistent with, and reach different conclusions from, the information presented in this report. Opinions or predictions
expressed herein reflect the authors’ views, not that of TMB, as of date of the analysis and are subject to change without
notice. TMB shall not be responsible for the use of contents and its implication.
Appendix
FDI in Cambodia
• Available investment entity option
• Wholly foreign owned enterprise
• JV
• Mutual contact
• Concession
• Available business operation option
• Sole Proprietorship
• Partnership
• LLC
• Foreign Business
• More FDI information in Cambodia at
• The Council for the Development of Cambodia (CDC) http://www.cdc-crdb.gov.kh/
• The Cambodian Investment Board (CIB) http://www.cambodiainvestment.gov.kh/
• Cambodian Special Economic Zone Board (CSEZB) http://www.cambodiasez.gov.kh/
• The Cambodian Rehabilitation and Development Board (CRDB)
Export to Cambodia
• Export goods with exception from pre shipment inspection
• (a) Precious stones, and precious metals. (b) Object of arts, (c) Explosives and pyrotechnic products, (d) Ammunition,
weapons, implement of war (e) Live animals, (f) Current newspapers and periodicals. 3 (g) Household and personal
effects. (h) Parcel post or commercial samples. (i) Gifts made by foreign governments or international organizations to
foundations, charities and recognized humanitarian organization. (j) Gift and supplies to diplomatic and consular
missions and to agencies depending from the United Nations Organization imported for their own needs. (k) Grants in
kind. (l) Goods imported for government use under government order. (m) Scrap metals. (n) Cigarettes (o) Temporarily
admitted goods (temporary import for inward processing for export)