Investment law pushes Cambodia as ‘hub for efficient investments’
Investment law pushes Cambodia as ‘hub for efficient investments’
Cambodia’s evolving investment law framework is driving the economy’s attractiveness for foreign investors in 2025 and turning the market into a “hub for efficient investments”, according to a recent analysis by Indian-based media outlet, Global Indian Network. The analysis detailed key benefits, risks, and strategies for foreign investors looking to successfully enter the Cambodian market.
According to the analysis, the Law on Investment of the Kingdom of Cambodia, which was last amended in 2022, is increasingly offering incoming investors tailored, unique opportunities that allow for increased investment activity.
Further, the analysis detailed that key features of Cambodia’s investment regulation framework that are supporting increased private investments by international firms in recent periods include the ability to hire foreign staff within operations, the assurance of comprehensive protection to investors, guaranteeing against nationalization and allowing the free repatriation of profits in foreign currencies, as well as opportunities to benefit from access to international arbitration for resolving disputes.
On top of this, the ability for foreign investments to be classified as Qualified Investment Projects (QIPs) is actively encouraging investments across a range of high-priority sectors, including technology and research and development (R&D).
QIPs gain basic incentives such as tax holidays and income tax exemptions for defined periods, noted the report, along with the potential application for special incentives; including tax incentives, value-added tax (VAT) exemptions on production inputs, and customs duty exemptions for production equipment and raw materials.
Production equipment and locally made production inputs are the ones most impacted by these exemptions under the investment law, noted the analysis, as policies allow deductions up to 150 percent from the tax base of these items.
QIPs also receive an additional VAT exemption for the initial implementation of the project itself.
Other supportive laws for inbound investors include incentives for accelerated depreciation through special depreciation measures, allowing investors to efficiently deduct capital expenditures.
Despite an overall favourable investment climate, the Global Indian Network analysis identified current risks facing foreign investments entering the Kingdom.
“Despite improvements, inconsistencies in the investment application of tax and administrative regulations remain a concern for foreign companies,” noted the report, adding that outside of major urban hubs like Phnom Penh, a lack of physical infrastructure in rural areas may hinder some business activities.
Foreign investors must also comply with Cambodia’s environmental management regulations and ensure proper facilities for workers, the report detailed, such as fair wages and safe working conditions; failure to meet these standards resulting in both reputational damage and penalties.
Meanwhile, global economic fluctuations, or disruptions in production chains, could still pose challenges for investors based in the country, the report said.
The analysis recommended that foreign investors considering expansions into the Cambodian market target sectors that are eligible for additional incentives under the Law on Investment, such as food processing industries, renewable energy, electronic industries, and digital services.
