Kampuchea is the first strategic partner and the first beneficiary of China's strategic cooperation. China is Cambodia's largest investor and donor. Eighty-five percent of the roads in Cambodia are built in China, and all hydropower stations and most of the infrastructure are built in China. Sihanouk Port, in particular, is the largest special economic zone approved by the Royal Government of Cambodia, known as the Shenzhen Special Economic Zone of Cambodia, and the first state-level cooperation zone in which China has signed bilateral government agreements to establish its legal status.
1. Preferential Policy Framework
The Government of Cambodia has given foreign investment the same treatment as domestic investment. The Investment Law (adopted by the First Special Session of the Royal Congress of Cambodia on August 4, 1994) and its amendment law (revised twice in 1997 and 1999) provide protection and relatively preferential tax and land leasing policies for foreign investment. In addition, foreign investment can also enjoy GSP treatment given to Cambodia by 28 countries/regions, such as the United States, Europe and Japan.
[Investment Guarantee] The investment guarantees provided by the Cambodian government to investors include: (1) basically equal treatment is given to foreign and domestic investors, all investors, regardless of nationality and race, are equal before the law; (2) the Cambodian government does not implement nationalization policies that damage the property of investors; and (3) approved investment projects. The Cambodian government does not regulate the prices of its products and services; and (4) does not exercise foreign exchange control, allowing investors to purchase foreign exchange from the banking system and transfer it abroad to settle their financial debts related to investment activities.
[investment preference] investment preferences for qualified investment projects approved by the Cambodian Development Council include: (1) exemption from import tariffs on production equipment, construction materials, spare parts and raw materials of investment and production enterprises; (2) exemption period of 3-8 years (up to 9 years in Special Economic Zone) for enterprises after investment. After that, the profit tax with a tax rate of 9% shall be paid according to the tax law; (3) the profit shall be used for reinvestment, and the profit tax shall be exempted; (4) the export tax shall be exempted for the export of products.
2. Industry Encouragement Policy
Cambodia's industry incentive policy is mainly embodied in agriculture and tourism.
[Agriculture] In attracting foreign investment in agricultural industry, the Cambodian government, on the basis of investment law, has developed projects for planting more than 1,000 hectares of rice, 500 hectares of cash crops and 50 hectares of vegetables; projects for Stockbreeding of more than 1,000 animals, raising more than 100 dairy cows and raising more than 10,000 poultry. Objectives; and freshwater aquaculture projects covering more than 5 hectares and seawater aquaculture projects covering more than 10 hectares are given support and preferential treatment. The main incentives are as follows: 1. After the implementation of the project, the maximum period of exemption from profit tax is 8 years from the year of first profit. Tax exemption is granted for consecutive losses. If investors use their profits for reinvestment, they can be exempted from earnings tax; (2) the government only levies a net profit tax at a tax rate of 9%; (3) distribution of investment profits, whether transferred abroad or distributed in Cambodia, will not be taxed; (4) construction materials, means of production, various materials, semi-finished products and raw materials that need to be imported for investment projects. Material and spare parts required can be exempted from 100% tax and other taxes, but the project must be 80% of the product for export investment projects.
[Tourism] Since the first Royal Government put forward the strategy of giving priority to the development of tourism, the economic function of Cambodian tourism has been fully valued, which laid a good foundation for the industrialization of tourism. For more than ten years, tourism has become the main growth point and pillar industry of Cambodian national economy. At present, most provinces and municipalities in China regard the development of tourism as one of the most important tasks, positioning tourism industry as 'priority development industry', 'pillar industry' and 'characteristic industry' to accelerate development.
Any enterprise engaged in commercial activities in Cambodia must be registered, otherwise it will be punished as illegal business activities.