If Cambodia is a country practically unknown to most Spaniards, with the exception, if you will, of some of the most outstanding aspects of Khmer culture, such as the sacred city of Angkor, as a market it is even more so, perhaps, for most entrepreneurs. This latter lack of knowledge may be due to the fact that Spain does not have a resident embassy in Phnom Penh, and Cambodia does not have one in Madrid either, as the diplomatic representations of both countries are, under multiple accreditation, located in Bangkok and Paris respectively. This lack of direct institutional presence, combined with a poorly defined foreign strategy, would also explain, in the business field, the limited level of investment opportunities in Cambodia, which, as we will see, is in need of a strong push.
While it is true that Cambodia is not yet among the most developed countries in Southeast Asia, the sustained growth in recent years, with an annual average of 7%, except for 2020 due to pandemic-related causes, makes it a rapidly expanding market with investment opportunities in Cambodia that deserve attention. However, as of today, Spanish export and investment figures are still far from this attention, as Spain exported goods to Cambodia worth 23 million euros in 2019 (including automobiles, machinery, and medicines), imported goods from Cambodia worth 927 million euros (textiles, footwear), and made direct investments of just 1 million euros, while Cambodia did not make any investments in Spain.
In a context like this, which is frankly improvable, Cambodia has recently approved an ambitious legislative package consisting of three laws related to investments, companies, and contracts respectively, aiming to make its economy more attractive. Adding to this the fact that the regimes planned for Special Economic Zones, which were designed and located in various locations across the country to attract investments, enhance competitiveness, and promote development, will undergo significant modifications in line with the provisions of the new investment law, the conclusion to be drawn is that this new regulation could provide the necessary boost for foreign entrepreneurs’ business plans, including those of Spaniards.
In this regard, the new Investment Law (Royal Kram No. NB/RKM/1021/014), which has just come into effect in accordance with the provisions of the National Strategic Development Plan 2019-2023 and in line with Phase IV of the Rectangular Strategy for Growth, Employment, Equity, and Efficiency, defines and regulates different types of investment projects (qualified, expanded qualified, and guaranteed), providing protection and guarantees for investment opportunities in Cambodia on one hand and incentives on the other. In the first case, equal treatment with nationals – except for land ownership – and the right to due compensation in case of expropriation are ensured; while in the second case, various types of fiscal and/or tariff incentives are provided based on the sector and activity.
Although this law still needs regulatory development, its text already gives us an insight into the general framework that is much more open and flexible than its predecessors. Undoubtedly, it will allow exploring the opportunities offered by the Cambodian economy funded by the National Strategic Development Plan 2019-2023 with $60 billion and detailed in areas such as infrastructure (roads, railways, ports, airports), energy, water and solid waste treatment, tourism, digital economy, and food, among others. These investment opportunities in Cambodia are just another confirmation of what the plan itself claims: that the global economy is led by Asia and that this continent is currently the center of gravity of world trade. For more information, please refer to our guide “Investments in Southeast Asia: A Practical Guide to Why Establishing Yourself.”
Antonio Viñal
Lawyer
AVCO Legal
madrid@avco.legal
