As Cambodia enters new multilateral and bilateral trade arrangements across Asean and beyond, it has sought to take full advantage of the accompanying economic opportunities by updating its legal framework around trade and Foreign Direct Investment (FDI).
The legal reform on FDI was promulgated last year to create more accessible, friendly and fruitful investment conditions for overseas businesses wanting to bring their capital to the Kingdom. The Council for the Development of Cambodia (CDC) has since been engaging various embassies and commerce chambers from around Asean, welcoming audiences from associated business communities to increase their understanding of reforms and enhance bilateral economic cooperation.
This week, Sok Chenda Sophea, Secretary-General of the CDC, hosted the Indonesian Embassy and the Indonesian Chamber of Commerce to explain how Indonesian businesses can take advantage of the investment incentives and facilities in Cambodia.
Sudirman Haseng, Ambassador of Indonesia to Cambodia, opened the forum by praising the government’s efforts as the chair of ASEAN 2022 and remarked on both country’s commitments to a stronger economic alliance.
“The presence of Indonesian business people in Cambodia will strengthen Indonesia’s position as a reliable economic partner and likewise, from a political perspective, will contribute to strengthening bilateral ties between Indonesia and Cambodia.”
“The event held today was part of a plan to strengthen and deepen economic operations between the two countries. In the future, Indonesia and Cambodia will benefit from a closer and stronger trade and FDI relationship that will amplify growth and prosperity in both the short and long term.”
Indonesia, home to the world’s 16th largest economy, 60 million SMEs and this year’s G20 Summit, contributed over 3.6 billion dollars to Cambodian FDI in 2019, seeing a 12% increase from 2018. This has understandably contracted since the pandemic. However, Rabin Indrajad Hattari, Assistant Minister for Industry at the Ministry of State-Owned Enterprise, is confident that the two nations will get back on track together.
Indonesia’s State-Owned Enterprise (SOE) has a broad reach with 83 branch offices across 17 countries. Hatari explained: “Our global State-Owned Enterprise (SOE) presence across the globe is very concrete – Over 17.5 billion dollars has been contributed to global FDI by Indonesian SEOs, with the ability to expand further.”
The Cambodia-Indonesia business forum is one of many dialogues chaired by CDC with foreign embassies, chambers and distinguished business people. Over time, it aims to involve as many representatives from different countries as possible, divulging the promulgation in understandable and concise terms.
The reformed investment law, comprised of 12 chapters and 42 articles, now allows for a more diverse range of activities and SMEs eligible for Qualified Investment Project (QIP) status. The key features include an accelerated certificate process, investors’ generous incentives, and long-lasting tax incentives to support QIPs. The law now also allows QIPs, under all sectors, to be 100% foreign-owned without any need for local participation.
Chenda Sophea, Secretary-General of the CDC, drew attention to the breadth and versatility of investment opportunities in Cambodia. “For our Indonesian friends who have never been to Cambodia, and indeed all foreigners, all sectors of our economy are open for business, there is no sector that is reserved for Cambodian business only,” he said.
According to Chenda Sophea, the list of unacceptable activities, known as the ‘Negative List’, will be far outweighed by the list of acceptable ones. The Negative List is expected to be included in an upcoming sub-decree to be implemented later this year.