Cambodia Real Estate has experienced a long period of strong economic growth, with the average annual gross domestic product (GDP) growing at a rate of 7% over the past decade, driven by growing exports, rising investment and domestic consumption. The reason is tourism is another major partner in development, with tourist arrivals reaching 6.61 million in 2019. You can argue against Cambodians for some technical reasons, but it is much difficult to avoid the numbers. Real estate Cambodia has the youngest populations in all over the world and is best positioned in a great growing region with emerging tourism, employment and Cambodia Investment Opportunities.
Despite the concessions, Real Estate Cambodia has not attracted historically significant US investment. In addition to the country’s relative market size, there are other factors that have disappointed American investors, such as corruption, limited supply of skilled labour, inadequate infrastructure, and lack of transparency in some government approval processes. The failure to consult the business community on new economic policies has also created difficulties for domestic and foreign investors.
1. Openness around Foreign Investment
Real Estate Cambodia has a foreign invested government and actively pursues FDI. The basic law governing investment is the 1995 Investment Law. In most sectors, the Cambodian government allows 100% foreign ownership of companies. Foreign investment in a handful of sectors such as cigarette manufacturing, film production, rice milling, jewelry mining and processing is subject to participation in local equity or prior authorization from the authorities. Although there is little or no legal discrimination against foreign investors, some foreign businesses report losses compared to Cambodia or other foreign competitors who are involved in corruption or tax evasion or poor Cambodian regulation. Take advantage of the implementation.
2. Bilateral Investment and Taxation Treaties
In June 2007, Cambodia signed the Investment Framework Agreement and Trade with the United States to maximize trade and investment between the two countries and to address investment issues. Provide a forum for the fifth TEFA meeting in January 2019 in Samraps, Cambodia. By 2020, Cambodia has signed bilateral investment agreements with 27 countries, including:
Austria, Bangladesh, Belarus, China, Croatia, Cuba, Czech Republic, People’s Republic of Korea, France, Germany, Hungary, India, and Indonesia, Japan, Kuwait, Laos, Malaysia, Netherlands, Pakistan, Philippines, Republic of Korea, Russia , Singapore, Switzerland, Thailand, Turkey, UAE and Vietnam.
3. Legal Regime
In general, Cambodia’s regulatory system, despite being improved, lacks transparency. This lack of transparency is the result of a lack of legislation and limited capacity of key institutions and is exacerbated by a weak judicial system. Foreign Cambodia Investors complain that the decisions of Cambodian regulatory companies are influenced by arbitrariness or corruption.
For example, in May 2016, which was considered popular, the government set retail fuel prices with very little consultation with the petroleum companies. In 2017, the National Bank of Cambodia introduced interest rates on loans provided by the microfinance industry. In recent few years, investors have expressed concern over draft legislation that is not subject to stakeholder consultation.
4. Industrial Policies
Cambodia Investment law offers a wide variety of investment incentives for large projects that meet certain criteria. Investors looking for motivation. For example, it is most important to apply to the CDC for the benefits as part of a Qualified Investment Projects. Investors wishing to apply must pay an application fee of 8 million KHR, including obtaining the necessary approvals, licenses or registrations from all relevant ministries and agencies including stamp duty.
The CDC must seek ministerial approval for investment proposals that include a capital of 50-50 million or more, politically sensitive issues, exploration and exploitation of mineral or natural resources, or infrastructure concessions.
5. Financial Sector
The Cambodia Securities Exchange (CSX) was founded in 2011 and was launched in 2012 to cater to the needs of the capital markets in Cambodia. Attract multiple listed companies, including SMEs. It has five agencies, including Phnom Penh Water Supply Authority, Sihanoukville Autonomous Port, Phnom Penh SEZ PLC, and Sihanoukville Autonomous Port.
6. Responsible Business Conduct
Cambodian businesses have a small but great awareness of responsible business practices (RBCs) and Environmental, Social, and Governance (ESG), despite the fact that the government does not have clear policies to promote them. ESG and RBC programs are mostly found in biggest and multinational companies in the country. For example, US companies have implemented a wide range of ESG activities to promote skills training, environment, general health and well-being, and financial education. These programs have been greatly welcomed by both the general public and the government.
Some of the more prominent enterprises in the country have started to take the lead on ESG initiatives, notably a fast-growing conglomerate led by a Cambodian businessman originally hailing from China.
7. Labour Policies and Practices
The COVID-19 epidemic has had a significant impact on the Cambodian labour sector, the full extent of which is still unknown. Cambodia’s manufacturing and garment sector, which relies heavily on global supply chains for input and demand from the United States and Europe, has been hit hard by COVID-19.
The government estimates that by July 2020, 190,000 of Cambodia’s approximately 1,000,000 workers have been laid off. In addition, about 90,000 of Cambodia’s 1.4 million migrant workers returned from abroad due to the loss of COVID-19. The Cambodian labour force includes about 11 million people.
8. Foreign Portfolio Investment and Foreign Direct Investment
Cambodia’s foreign investment increased by 8 824.3 million in June 2020, compared to 80 806.8 million in the previous quarter.
Cambodia has seen an increase in FDI inflows in recent years. Although FDI focuses primarily on infrastructure, including commercial and residential real estate projects, it has recently supported investments in manufacturing and agricultural processing. Cambodia reports that its total FDI stocks in 2019 reached $ 42 billion in fixed assets, up from $ 38.5 billion in 2018.
The Private Sector in Cambodia
In the Cambodia Real Estate Market, the private sector enjoys healthy policy discussions with the government through organizations such as the Bankers Association, the Garment Manufacturers Association of Cambodia, as well as the Phnom Penh Chamber of Commerce. Many foreign investment associations have also been established in Cambodia with the cooperation and collaboration of foreign embassies and missions.