Many investors are looking for new opportunities in Southeast Asia, and Cambodia is fast becoming a prime destination. The country has undergone rapid development in recent years and is now one of the fastest-growing economies in the world.
With a young and self-motivated population, Cambodia is an appealing market for businesses looking to grow their operations in Southeast Asia. Here are a few reasons why Cambodia looks set to be an investment attraction in 2023:
Investment Incentives
The Ministry of Commerce and the CDC (Council of the Development of Cambodia) are responsible for monitoring Cambodia’s foreign direct investment (FDI) and business growth. Qualified Investment Projects (QIPs) that are eligible for business benefits must be listed with the CDC to be approved.
QIPs are specifically designed to promote foreign investments in Cambodia. The CDC and the Ministry of Commerce both play an active role in ensuring that the country’s FDI and business growth remain on track.
QIPs have the option of choosing either a depreciation allowance, or a profit-tax holiday. Through a tax holiday, investors can benefit from a reduction in profit tax from 20% to 0% valid for a pre-determined number of years. Alternatively, opting for the depreciation allowance enables them to secure a generous tax break if they need to bring in large volumes of machinery and other goods.
Additionally, all QIPs are free of duty on imports for production equipment, construction and input materials. With some exceptions, products produced by the QIP will also not be subject to export taxes.
Furthermore, with the ASEAN, and ASEAN-China Free Trade Areas, the potential exists for full exemption of export and import duties on traded goods.
Projects which exceed a predetermined size are eligible for QIP incentives; however certain activities – such as casinos, restaurants, and professional services – are excluded.
Investors looking to benefit from investment incentives in Cambodia should submit their application to the Cambodian Investment Board, a section of the CDC responsible for examining applications. This process is described in the accompanying flowchart and is surprisingly quick and simple. The CDC will take care of any licenses required from other Ministries on the investor’s behalf.
Investors in garment and agricultural industries can take advantage of additional incentives, such as VAT exemptions on particular exports. The scope and nature of these incentives are dependent on the size and type of investment.
CDC incentives may prove to be a desirable proposition for those desiring a substantial investment in the country.
Open Economy
Cambodia’s economic environment is one of the most welcoming in the region for foreign investment. The government has made investment incentives and a streamlined process for qualified investments available, as well as offering competitive tax rates. All of this reflects their commitment to drawing in international investment.
The country’s economy is projected to grow at a rate of 6.5% in 2023, making it one of the fastest-growing economies in the world. Strong exports, investment, and tourism are driving this growth.
Businesses looking to expand their operations in Southeast Asia will find Cambodia attractive due to its economic growth.
The Cambodian government is also actively encouraging foreign investors to set up businesses in the country by providing attractive incentives. This includes tax exemptions, low labour costs, and access to large markets within ASEAN and beyond.
With an expanding economy, strong economic fundamentals, and a favourable investment climate, Cambodia is likely to attract more investments in 2023.
Young and Dynamic Population
Cambodia has a young and dynamic population with a median age of 28 years. There are 17.1 million people in the country under 40, which is 74% of the total population. The young population offers potential investors a huge opportunity to explore the workforce of Cambodia.
Cambodia has seen swift growth in its urban population in recent years, with 21.44 percent of the population residing in cities and towns in 2013. Urbanization offers numerous economic and social advantages.
According to 2021 estimates, approximately 30.7 percent of Cambodia’s population are under the age of 15. This would account for almost a third of the total population in this country.
It demonstrates the importance of investing in early childhood education and family planning to ensure continued growth and development. With the right support and resources, this young population has the potential to become an even bigger part of Cambodia’s future.
The country also has a growing middle class with an increasing demand for goods and services. Businesses that can tap into this growing market will succeed in Cambodia.
Improved Infrastructure
Cambodia has a total area of 181,035 square kilometers, which is divided into three topographical sections. The Central Plain Region covers approximately 51 percent of Cambodia’s area, while the Mountainous Region and Coastal Region occupy 39 percent and 10 percent, respectively.
Since the Paris Peace Accords of 1991, Cambodia has experienced a significant transformation, transitioning from a state of conflict to one of peace. This marked the start of an era in which the majority of those involved in the low-intensity civil war during the 1980s agreed to compete for power through democratic elections rather than through violent means.
This newfound peace has allowed the Cambodian government to focus on developing the country’s infrastructure. As a result, Cambodia now boasts modern highways connecting the capital city with other major cities and airports throughout the country. The government also has invested heavily in renewable energy sources and is committed to reducing greenhouse gas emissions by 30 percent before 2030.
In addition, Cambodian conglomerates are also investing greatly in the country’s infrastructure, including port facilities and new hotels.
Prominent Cambodian businessman Chen Zhi and Prince Group, one of the country’s leading and largest conglomerates, is spearheading an ambitious township project spanning approximately a thousand hectares along the Sihanoukville coastline, and will be one of the most significant real estate developments in Cambodia for years to come. This development is slated to bring in a total investment of around USD $16 billion into Cambodia.
The township project will be an integral part of the country’s economic and social progress, and will play an essential role in creating new job opportunities and providing high-quality housing and commercial space.
With an ambition to transform and build up more living and working spaces in Cambodia, Chen Zhi and the business enterprise that he leads are continuing to roll out significant projects in Phnom Penh and other parts of the country with great interest from outside investors looking in.
Natural Attractions
The country is naturally blessed with varied terrain ranging from mountains and jungles to plains and coastal regions. This geographic diversity makes Cambodia an ideal spot for various activities, from trekking to beach leisure.
The country’s picturesque landscape is characterized by rolling hills, lush green forests, vast swamps and majestic mountains making it one of the most beautiful countries in Southeast Asia. From the ancient Khmer temples to the unparalleled beaches of the South coast, Cambodia’s diverse topography is truly something to behold. Cambodia offers an unforgettable experience to anyone who visits, and its vast diversity makes it a great destination for all types of travelers.
This incredible variety of landscapes and terrain makes the country ideal for investment in a range of industries such as tourism, hospitality, technology, and agriculture.
Conclusion
In summary, Cambodia has a lot to offer investors in 2023. The country is undergoing major changes with investment incentives, an opening up of its economy, and improved infrastructure. In addition to this, its natural beauty makes a visit worthwhile. With all these elements in place, it looks set to be an attractive destination for foreign investors. Investing here is sure to bring great rewards and cement Cambodia’s place as a hub of commerce and culture. The future looks bright for Cambodia!
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