Investment in Cambodia

Saily Sor

Table of contents Cambodia at a glance Council for Development of Cambodia(CDC) Role and Responsibility Investment Approval Process Legal business type in the company according to the law of investment Major investment in Cambodia Incentive of Law of investment in Cambodia Cambodia Accounting System Cambodia Tax system Summary of Tax rate in Cambodia When is the tax should be paid? Reason to invest in Cambodia Cambodia economic situation Map explorer of Cambodia Average flight from Cambodia to other ASEAN countries ASEAN Infrastructures Recent Development in Cambodia Prohibited fields of investment Comparison between Cambodia and Thailand References

Cambodia at a glanceLand area: 181,035 km2 Population: 15,458,332 ( 2014

Estimated)GDP: USD $18Billion

( Estimate2015)GDP per capita: $1,146.083

( 2015estimate)Legal system: Constitutional

Monarchy Political: Prime Minister of

Cambodia is selected by voting from people

Membership: WTO,IMF,WB,UN, ASEAN

The Council for Development of Cambodia (CDC) is the sole and One-Stop Service organization responsible for the rehabilitation,

development and oversight of investment activities. The CDC is responsible for the evaluation and the decision-making on all

rehabilitation, development and investment project activities (Article 3, “Amended Law on Investment”)

Council for Development of Cambodia (CDC)Role and Responsibility

Investment application

CDC issues a Conditional Registration Certificate to the Applicant

Company Registration / Ministry of Commerce Relevant licenses, as appropriate / Ministry of Industry and Energy Review and approval of construction plan / local authorities- Ministry of Land Management, Urban Planning and Construction. Initial environmental impact assessment / Ministry of Environment Tax Department Registration / Ministry of Economy and Finance

CDC issues a Final Registration Certificate to the Applicant

3 working days

28 working days

Investment Approval Process

Legal business types in Company according to Law of Investment

A. EnterpriseB. Limited CompanyC. PartnershipD. Foreign Business

a. Commercial representativeb. Branchc. Subsidiary

Major Investment 2011 2012 2013 2014 2015 2011-2015

Agriculture 794.5 556.6 1,128.80 264.7 482.6 3,227.20Industries 1,340.80 1,489.70 1,106.70 2,835.60 919.3 7,692.10

Infastructure 2,782.30 227.8 2,620.80 353.5 3,129.80 9,114.20Tourism 845.6 691.5 106 479.6 111.9 2,234.60

Total 5,763.20 2,965.60 4,962.30 3,933.40 4,643.60 22,268.10

Major Investment in Cambodia

26%

10%

17%

36%

11%

Major Investment

Major Investment Agriculture IndustriesInfastructure Tourism

Improve infrastructure and utility Improve modern education and technical trainingHighly recommend for investment project that bring back the positive

development Encourage and support for project that bring back skill and develop

innovationEncourage and support for investment project that develop new product

by using local process productHighly recommended investment to consult with CDC in order to form

the business in Cambodia

Incentive of Law of Investing in Cambodia

Accounting SystemKICPAA (Kampuchea Institute of Certified Public Accountants and Auditors)CASs(Certifier of Accounting Standard)ASEAN federation of accountants (AFA)IFRS(International Financial Report Standard)

Cambodia Accounting System

Tax LawsLaw on Taxation of The Kingdom of Cambodia 2003Financial act 1994,1995,2007Other provision(Prakash, Sub decree, direction and notification…)

Cambodia Tax System

Corporation tax rate: 20%Sales/service tax rate: 10%Oil, gas, and business related to mineral exploitation is 30%Insurance: 5%Withholding tax: 10% to 15%VAT 10%, 0% for industries who supply certain goods and service to exportersPersonal income tax : 0% to 20%Cambodia no tax on capital gainTaxes on specific goods and services:

Gazed soft drinks, alcoholic product, beer : 20% Cigarettes: 15% Entertainment services, air transport of passengers: 10% Telephone services: 3%

Summary of Tax Rate in Cambodia

Every month by before 15th day of the following month.For annual profit tax by before March 31st of the following year.VAT by before 20th day of the following month.

When is the tax should be paid?

Reason to Investment in Cambodia

Rich in natural resourceFriendly investment environmentFull supply of utility( electricity and water)Fully supporting from government on private sectorOne stop service by CDCHas the lowest labor cost and a dynamic workforce among

ASEAN countriesHave international airport and port for transport the

products Member of ASEANMember of Mekong FivesWTO member since 2004 increasing trade integrationsNot entered double tax agreement

Cambodia economic Situation

Map Explorer of Cambodia

Average Flight from Cambodia to other ASEAN Countries

ASEAN Infrastructures

Recent Development in Cambodia

Aeon Shopping Mall

Camko City Olympia City

Wattanac Capital and Canadia Tower

Production/processing of psychotropic substances and narcotic substances

Production of poisonous chemicals, agriculture pesticide/insecticide and other goods by using chemical substances prohibited by international regulations or the World Health Organization, that affect the public health and environment

Processing and production of electrical power by using any waste imported from a foreign country

Forestry exploitation business prohibited by Forestry Law.

Prohibited Fields of Investment

Compare between Cambodia and Thailand Cambodia Thailand

Currency Riel BathCurrency rate($1) 4079.63 Riel 35.25 Bath

Trade organizations WTO,ASEAN,AFTA WTO,APEC, IOR-ARC,ASEANGDP $18.61 billion $1.054 trillion

GDP per capital $1,225 $15,319GDP growth 0% -0.30%

Inflation 5% 3.02%Population 15.6 million 68 millionLand area 181,035 km2 513,120 km²

Industry Tourism, garments, construction, rice milling, fishing, wood and wood products, rubber, cement, gem mining, textiles

Tourism, textiles and garments, agricultural processing, beverages, tobacco, cement, light manufacturing such as jewelry and electric appliances, computers and parts, integrated circuits, furniture, plastics, automobiles and automotive parts; world's second-largest tungsten producer and third-largest tin producer

Export $6.781billion $214.37 billion

Export Commodities Clothing, timber, rubber, rice, fish, tobacco, footwearElectronics, computer parts, automobiles and parts, electrical appliances, machinery and equipment, textiles and footwear, fishery products, rice, rubber

Import $8.895million $202.65 billion

Import commoditiesPetroleum products, cigarettes, gold, construction materials, machinery, motor vehicles, pharmaceutical products Capital goods, intermediate goods and raw materials, consumer goods, fuels

Labor force 8.8million 39.41 millionElectricity import 1.83billion kWh 9.575 billion kWhElectricity export 0 1.535 billion kWh

Telephone line 584,000 6.391 millionMobile 19.1 million 84.075 million

Internet user 78,500 17.483 millionRailway 690 kmm 4,071 km

Roadway 39,618 km 180,053 kmWaterway 3,700 km 4,000 km

Sector 2009 2010 2011 2012 2013 2014 TotalAgriculture Products 60 72 64 69 61 37 363

Mineral and Ceramics 13 18 31 31 26 27 146 Light Industries/Textiles 48 65 62 69 67 37 348

Metal Products and Machinery 157 217 300 452 410 296 1,832

Electric ad Electronic Products 108 189 180 261 241 168 1,147 Chemicals and Pape 63 107 101 183 169 106 729

Service 165 188 166 292 250 241 1,302 Total 614 856 904 1,357 1,224 912 5,867

Major Investment in Cambodia 2011 2012 2013 2014 2015 2011-2015

Agriculture 794.5 556.6 1,128.80 264.7 482.6 3,227.20Industries 1,340.80 1,489.70 1,106.70 2,835.60 919.3 7,692.10

Infastructure 2,782.30 227.8 2,620.80 353.5 3,129.80 9,114.20Tourism 845.6 691.5 106 479.6 111.9 2,234.60

Total 5,763.20 2,965.60 4,962.30 3,933.40 4,643.60 22,268.10

Foreign Investment Projects Approval by BOI

http://www.iasplus.com/en/jurisdictions/asia/cambodia http://www.cambodiainvestment.gov.kh/investors-information/taxation-and-accounting.html https://en.wikipedia.org/wiki/Cambodia http://uk.practicallaw.com/3-524-4317#a929134 http://country-facts.findthedata.com/l/110/Cambodia http://www.pwc.com/kh/en/publications/2012/assets/cambodia-tax-book2012-05042012.pdf http://www.tax.gov.kh/en/brief.php http://www.rd.go.th/publish/fileadmin/user_upload/AEC/AseanTax-Cambodia.pdf http://www.cambodiainvestment.gov.kh/law-on-accounting-law-on-corporate-accounts-their-audit-and-the-accounting-

profession_020708.html http://www.cambodiainvestment.gov.kh/investment-scheme/investment-application-procedures.html http://pps.com.kh/PPSUploadFiles/iv/167_en-us.pdf http://www.cambodianembassy.org.uk/publications/PDF/Tourism/Investing%20in%20Cambodia%202013-2014.pdf http://www.cambodiainvestment.gov.kh/investment-enviroment/investment-trend.html

References