Cambodia Seeks To Revive FDI With Revamped Law
In 2019, Cambodia had its best year in terms of foreign direct investment. According to the 2020 World Investment Report by UNCTAD, Cambodia saw $3.7 billion of FDI, a rise of 16 percent compared to the $3.2 billion it received in 2018.
But with uncertainty over the evolution of the COVID-19 pandemic, the kingdom witnessed FDI declining slightly to $3.5 billion, the National Bank of Cambodia reported, with non-banking sectors particularly affected.
And now Cambodia is looking to ramp up its efforts to attract investment, with a draft law currently making its way through the legislative process.
Development of the country’s investment law has been eagerly awaited by the business community — Cambodia last amended its investment law in 2003 – and businesses leaders have campaigned for an update for years.
The new law is expected to attract tech and information companies and clear up residential visa complexities, while emphasising Cambodia as an attractive place to do business.
Sok Siphana, the founder of law ﬁrm Sok Siphana & Associates, a member of ZICO Law, says the new investment draft law will bring opportunities to Cambodia and attract interest in the region.
“The new investment law will place Cambodia in a very competitive position vis-à-vis its neighbours in ASEAN,” Siphana says, adding the law’s “ﬁscal and non-fiscal incentives are very enticing for new investors.”
Siphana, a former adviser to the Council of Development of Cambodia, recently spoke at a virtual forum hosted by the American Chamber of Commerce about the country’s investment opportunities.
A range of industries and areas in Cambodia could beneﬁt from further foreign investment and the impending law change, Siphana says, explaining that “most of the areas covered areas that are reflecting the current trade and investment realities, the like of new industries or manufacturers with high value-added products.”
Among these are “electrical and electronic industries, component parts, assembly and installation industries; mechanical and machinery industries; agro-industry, and food processing; digital industry; green energy.”
With COVID-19 denting the lucra-tive tourism sector in Cambodia, ofﬁcials are looking for ways to strengthen the country’s overall economy.
At the 42nd General Assembly of ASEAN Inter-Parliamentary Assembly (AIPA-42), which took place virtually in August, the president of the Cambodian National Assembly, Heng Samrin, announced that digital technology will take an increasingly important posi-tion in stimulating economic recovery post-COVID-19, and developing a more robust, sustainable economy.
While the new investment law could attract exactly this type of talent, would-be investors in Cambodia need to be aware that challenges remain.
“Selection of local partners needs to be done very carefully,” Siphana warns, adding proper due diligence is important.
But the inevitable disputes are already catered for. “The issue of disputes in the Cambodian courts is very much alleviated with a well-functioning commercial arbitration centre up and running now,” he says.