This section discusses key manufacturing centers in Cambodia. It is part of the Developing Country Sourcing’s Sourcing from Cambodia series to empower buyers looking to enter new supplier markets in Asia.
Cambodia is seen as the next important manufacturing and export hub particularly for garments, textiles and footwear. Most of the raw materials used for manufacturing are outsourced from its neighboring countries.
Production takes place mainly in Special Economic Zones (SEZs) scattered across the country such as Phnom Penh, Bavet, Sihanoukville, Poi Pet and Koh Hong.
As of 2014, there are 14 SEZs with more than 200 investors that generated employment for approximately 70,000 workers in Cambodia SEZs, according to the Council for the Development of Cambodia.
The government promotes SEZs heavily by granting incentives to investors as well as to Qualified Investment Projects (QIPs) located in these export zones.
Investment Incentives Granted to a Qualified Investment Project (QIP)
According to the Amended Law on Investment (LOI), QIPs are entitled to the following investment incentives:
• May elect to receive a profit tax exemption or use special depreciation.
• Profit tax exemption (Selective): A tax holiday period is composed of “Trigger period” + 3 years + Priority Period (Maximum total 9 years). An annual Certificate of Obligation Satisfaction (or “Certificate of Compliance”) has to be obtained by the QIP to be entitled “Profit Tax Exemption”.
• 40% special depreciation allowance on the value of the new or used tangible properties used in the production or processing.
• Duty free import of production equipment, construction materials, etc.
• Entitled to the same incentives and privileges as other QIP stipulated in the Amendment to the LOI.
• Entitled to 100% exemption of export tax, except for activities as stipulated in laws in effect.
• The rights, privileges and entitlements of a QIP can be transferred or assigned to a person who has acquired or merged a QIP subject to the approval of the Council for the Development of Cambodia (COC) or the Provincial-Municipal Investment Sub-Committee (PMIS).