1. “Legal and Fiscal Aspects of Doing Business in Cambodia”
Federation of Malaysian Manufacturers (FMM) Trade & Investment Mission
Sok Siphana
Managing Partner
Phnom Penh, 21 July 2016

2. Contents Overview of Cambodia Cambodian Court System
Setting up a Foreign Business in Cambodia
Labour, Land Law, and Tax
Latest Legal Updates
Doing Business in ASEAN
About ZICOlaw

3. General Overview Cambodia Constitutional monarchy 1993 Constitution
Main title with baseline
Cambodia
Constitutional monarchy
1993 Constitution
Free market economy
Provincial/municipal courts, Appeal courts, Supreme Court
Separate Military Court for military offenses

4. Key Indicators Population & Labor Force Population: 15 Million
Literacy:
92.7% (15-24 years old)
Young and dynamic labor force:
Median age 24 years old
Population growth rate:
1.54%

5. Key Indicators
GDP Growth ( )

6. Key Indicators GDP Per Capita (2004-2015)
Stable Exchange Rate (USD-Riel)

7. Future Industrial Development Prospects
Cambodia 2015 and Beyond: More Industry and technology 7
Source: Atlas of Economic Complexity

8. Committed Investments (by Country)
Year
2011
2012
2013
2014
Jan-Jun 2015
Total
$5.7 Billion
$2.9 Billion
$4.9 Billion
$3.9 Billion
$3.3 Billion
Rank
Country % 1
Cambodia
41.24
42.08
66.80
64.00
88.63 2
China
30.55
20.69
15.68
24.44
7.65 3
Vietnam
11.99
Korea
9.89
6.10
Malaysia
2.18
0.86 4
U.K
4.30
Japan
9.15
Thailand
4.37
1.72
0.77 5
4.20
6.04
1.76
1.66 UK
0.54 6
2.91
4.53
1.59
1.26
0.53 7
U.S.A
2.47
2.89
1.04
1.13
0.52 8
1.15
Singapore
2.59
1.03
0.89
Canada
0.27 9
Australia
0.43
0.51
0.88
0.13 10
0.28
0.42
France
0.06 11
Others
0.48
1.21
0.94
1.36
0.04

9. Committed Investments (by Sector)
Investment Capital
( June 2015)
Total of USD billion
Total
5,763.2
2,965.6
4,962.3
3,933.4
3,315.8

10. Trade Performance Export volume increased to $7.7 billion
Cambodia’s trade volume in 2014 was valued at $18.1 billion.
Export volume increased to $7.7 billion
Import volume was up to $10.4 billion
Increasing import value was due to growth in the construction, agriculture, and manufacturing sectors
Special Trade Preferences: EU’s Everything But Arms
Import of raw materials to support industrial sector.
Export of finished goods directly to the market.
Improve efficiency and reduce logistics costs.

11. MFN/GSP Market Access Australia Austria Belarus Belgium Bulgaria
Canada
China
Czech Republic
Denmark
Finland
Poland
Portugal
ROK
Russian Federation
Slovakia
Spain
Sweden
Switzerland UK
USA
EBA
(everything but arms initiative for LDCs)
France
Germany
Hungary
Ireland
Italy
N-Korea
Luxemburg
Japan
Netherlands
New Zealand
Norway
… and ASEAN Economic Community (AEC)
and the Regional Comprehensive Economic Partnership (RCEP)

12. Contents Overview of Cambodia Cambodian Court System
Setting up a Foreign Business in Cambodia
Labour, Land Law, and Tax
Latest Legal Updates
Doing Business in ASEAN
About ZICOlaw

13. Legal System
Supreme Court: - Located in Phnom Penh - Its jurisdiction covers all of Cambodia - Adjudicates questions of law
Appellate Court: - Located in Phnom Penh - Its jurisdiction covers all of Cambodia - Reviews questions of law and fact
First Instance Court (Municipal, Provincial, and Military): - Municipal and Provincial has 2 departments: Civil and Criminal. - Its jurisdiction covers the area in which the Court is located. - Military Court (Phnom Penh) settles cases related to military offenses and offenses related to the property of armed forces.

14. Contents Overview of Cambodia Cambodian Court System
Setting up a Foreign Business in Cambodia
Labour, Land Law, and Tax
Latest Legal Updates
Doing Business in ASEAN
About ZICOlaw

15. Setting Up a Foreign Business
“A foreign business is a legal person formed under the laws of a foreign country having a place of business in, and doing business in the Kingdom of Cambodia.”
Three types of foreign businesses:
Commercial Representative Office/Commercial Relations Office
Branch
Subsidiary

16. Company Incorporation
Relatively Easy
Register with the Ministry of Commerce (MOC)
Recommended structure: Limited Liability Company
100% foreign ownership permitted
No tax on dividends to resident shareholders
Competitive tax rates
Taxes filed monthly as well as annually
For tax registration, the Chairperson or his appointed director must be physically present at the General Department of Taxation for photo taking and fingerprint scanning
Enterprise registration and staff record updates on hiring and termination at the Ministry of Labour are required

17. Contents Overview of Cambodia Cambodian Court System
Setting up a Foreign Business in Cambodia
Labour, Land Law, and Tax
Latest Legal Updates
Doing Business in ASEAN
About ZICOlaw

18. Land Law Allows for private ownership of land
Allows leasing (short term-definite period of time and under fifteen years / long term-over fifteen years-right in rem)
Maximum lease duration 50 years plus 50 year extension
Concessions – State owned property can be conceded (typically) for a period of 70 years
Foreign ownership of land
Prohibited by the Constitution
Holding companies 51% Khmer/ 49% foreigner can own land
Foreigners can own apartments above the ground floor (only applicable in buildings registered under the co-ownership process (strata title)

19. Labour Law
Foreign employees allowed up to a quota of 10% (can be registered with the Ministry of Labor). Applications for additional quota can be made.
No minimum wage (apart from garment factory workers)
Labor unions active (but largely only affect the garment and hotel industry)
Work permits required for foreigners and work books for Cambodian staff

20. Tax Competitive corporate tax rate of 20% (in most cases)
Value Added Tax (VAT) of 10%
Maximum salary tax rate of 20% (maximum rate kicks in once salaries reach around US$3,125/month)
No tax on dividends to resident shareholders
Custom duties typically range between 0% and 35%
Duty exemptions on equipment, construction and raw materials for companies with CDC investor status
(NB: tax enforcement more robust since beginning of 2015)

21. Contents Overview of Cambodia Cambodian Court System
Setting up a Foreign Business in Cambodia
Labour, Land Law, and Tax
Latest Legal Updates
Doing Business in ASEAN
About ZICOlaw

22. Cambodia - Highlights of Latest Legal Updates
Intellectual Property
Cambodia joined the Madrid Protocol Trademark System mid-2015
Convenient and cost-effective, especially when expanding market
Accounting and Auditing Law
A new Accounting and Auditing Law passed early 2016
More standardized and transparent
Trade Union Law
A new Trade Union Law passed in the beginning of 2016
Facilitated collective bargaining

23. Contents Overview of Cambodia Cambodian Court System
Setting up a Foreign Business in Cambodia
Labour, Land Law, and Tax
Latest Legal Updates
Doing Business in ASEAN
About ZICOlaw

24. Why Cambodia?

25. Investment Incentives

26. Employment and Immigration

27. Dealing With Government & Authorities

28. Significant Recent Legal Development & Cases

29. Contents Overview of Cambodia
Setting up a Foreign Business in Cambodia
Cambodian Court System
Labour Law
Latest Legal Updates
Doing Business in ASEAN
About ZICOlaw

31. Contact Details Dr. Sok Siphana ZICO Law Cambodia
(SokSiphana&associates)

32. Important Disclaimer
The information provided in these slides are merely general information regarding Doing Business in Cambodia, relating specifically to regulatory, and legal aspects. The information provided herein may not be consistent with any specific or particular instances of any client or company, and it is not prepared to answer any specific query and purpose.
The information provided in these slides are private and confidential and have been prepared only for the use, consideration and perusal of attendees at FMM Trade & Investment Mission in Siem Reap and Phnom Penh on the 18th to 23rd July These slides are not to be relied by any other party nor should it be distributed to any other person without our prior written consent.