The Foreign Investment Law is intended to provide a quick and simplified process that requires intending investors to submit an application for an investment license, along with a US$100 application fee, a feasibility study, and the investors latest annual report. From the time of submission of the application, the CDC is required by law to decide within 45 days whether to approve the investment proposal. Although on occasions this time frame is not met, the majority of decisions are made within this period.

The Foreign Investment Law contains a number of important guarantees for the foreign investor which include:

(i) equal treatment of all investors;
(ii) no nationalisation adversely affecting the property of investors;
(iii) no price controls on products or services produced by licensed investor; and
(iv) no restriction on the remittance of profits abroad.

The Foreign Investment Law lists a number of sectors that are promoted, including industries using high technology, new industries, projects that create jobs, export driven projects, tourism, agriculture, infrastructure, energy, rural development, environmentally friendly project, and investment in Special Promotion Zones (which have not yet been established).

The following incentives are available to foreign investors in Cambodia:

(i) Nine percent corporate income tax.
(ii) Up to eight year exemption from corporate income tax.
(iii) Up to five year loss carry forward.
(iv) 100% exemption from import duties over a fixed period to be specified.
(v) Tax free repatriation of profits.
(vi) Tax free distribution of dividends and profits.
(vii) Freedom to employ foreign expatriates where the availability of qualified Cambodians is limited.

It should be stressed that the actual incentives awarded may not include all of the above, which are the maximum that are available, and investors should be aware that the incentives actually granted will vary from project to project. The award of a 9 % tax rate, for example, is rare. If a project falls within a promoted category or is otherwise seen as desirable (eg because of its size) the more favourable the incentives granted are likely to be.

Once approval in principle has been received from the CDC, the investor will need to prepare company documents and company registration papers for filing with the CIB and the Ministry of Commerce who will then issue a formal business license.


Regretfully, the reality of doing business in Cambodia is slightly more frustrating than a review of the Foreign Investment Law would suggest. At present, individual ministries are not co-operating with the CDC in the way envisaged which means foreign investors do not receive the one stop service that they may have hoped for. Good contacts with individual ministries are still important when establishing and operating investment or development projects in Cambodia.

Applications still need to be made to numerous governmental agencies and public bodies, depending on the nature of the activities to be undertaken. However, since the CDC is relatively newly established it is not altogether surprising that it is taking a while for all sections of the Cambodian government to become fully co-ordinated.

NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

If you would like further advice please contact: David Ellis, Johnson Stokes & Master, 16th Floor, Princes Building, 10 Chater Road, Hong Kong; Tel 2843 4226; Fax no. : 2845 9121. Alternatively do a text search "Johnson Stokes and Master" and "Business Monitor".