Cambodia

Recommendations:

Cambodia’s economy has grown rapidly for twenty years and is likely to grow in importance for labor-intensive manufacturing as labor costs rise in neighboring Vietnam. The country has low cost but relatively unskilled labor with established textiles and tourism sectors, but high corruption, limited infrastructure, and poor ease of doing business rankings create challenges. **Good choice for risk-tolerant manufacturers looking for low-cost labor**

(+) High GDP growth over the past two decades

(+) Low cost of labor and cost of living

(+) Strong textiles and tourism industries

(+) Potential future manufacturing hub

(-) Complex regulatory climate & widespread corruption

(-) Inadequate infrastructure

(-) Relatively unskilled labor pool with limited English

Highlights:

– 7.7% GDP average growth over last 20 years
– Special Economic Zones (SEZs) offer low-tax, low- cost areas for manufacturing and distribution
– 21% FDI consists of investments from China
– Ranked #144 of 190 on Ease of Doing Business Index due to bureaucracy and corruption

“Driven by garment exports and tourism, Cambodia’s economy has sustained an average real growth rate of 7.7% between 1998 and 2019, making it one of the fastest-growing economies in the world.”

World Bank, 2020

Country Facts:

Population:

16.7 million, 10.5m working age, growing at 1.4%

GDP:

$27 billion USD, 7.1% growth in 2019 but -4.0% in 2020

GNI per capita:

$1,560 USD ($4250 PPP), 3% Inflation (2019), lower middle-income country

Industries:

Textiles/garments, tourism, rubber, construction, mining, oil and gas reserves offshore

Tourism:

21% of GDP; 6.61 M arrivals in 2019; focused on Angkor Wat/Siam Reap

#144/199

#162/180

45%

10.5 M

$1.5k USD

#84/100

32% of NY

Ease of Doing Business

Corruption Perceptions Index

Human Capital Index

Working Age Population

Household Expenditure Per Capita

English Language Capabilities

Cost of Living Plus Rent Index

Marketing:

Per capita expenditure:

$1,560 USD

Internet penetration:

52% (Southeast Asia 69%)

Shop online:

32.9%

Mobile ownership:

125%

Primary messaging:

Facebook Messenger

Primary website:

Facebook

Average Labor:

Infrastructure:

Opening a Business:

Relevant Laws:

Law on Commercial Enterprise, 2005

Time to Incorporate:

Approximately 2-3 months depending on business entity and employees; requires multiple steps to include registration with the Ministry of Commerce, Ministry of Labor, and General Department of Taxation, plus obtaining appropriate licenses; fees vary.

Paid-in Capital:

Normally $1000 must be deposited in a local bank

Taxes:

National Bank of Cambodia must clear transfers of more than $10k; taxes include an annual patent tax based on company size, 20% profit tax, a 1% minimum tax on revenue, 10% VAT taxes, a salary tax up to 20% for employees, and a 10% rental withholding tax.

Restrictions:

100% foreign ownership is possible; foreign companies cannot own land, produce pesticides or other toxic chemicals, or exploit forest resources.

BBA Services:

BBA does not have a physical presense in Cambodia, but BBA can assist companies across many sectors and find trusted local partners