investment environment and opportunities in cambodia · investment environment and opportunities in...

Investment Environment and Opportunities in Cambodia

presented by

Sok Chenda Sophea Minister attached to the Prime Minister

Secretary General Council for the Development of Cambodia

Tokyo, 18th January 2016 Osaka, 19th January 2016

www.cambodiainvestment.gov.kh

I. Investment Environment in Cambodia

II. ASEAN Economic Community

III. Industrial Development Policy 2015-2025

IV. Investment Opportunities in Cambodia

V. Reasons to Invest in Cambodia

VI. The Pioneers

TABLE OF CONTENTS

2


I. Investment Environment in Cambodia

3


1. Key Indicators

Low & Manageable Inflation

Population & Labor Force

Population: 15 Million Literacy: 92.7% (15-24 years old) Young and dynamic labor force: Median age 24 years old Population growth rate : 1.54%

GDP Growth (2004-2016)

Stable Exchange Rate (USD-Riel)

GDP Per Capita (2004-2016) USD

Land area : 181,035 sq.km.

4

Lao PDR

4034 4025

4039 4050 4050

4000

4020

4040

4060

2012 2013 2014 2015e 2016p

2.9% 3.0% 3.9%

3.0% 3.5%

0.0%

2.0%

4.0%

6.0%

2012 2013 2014 2015e 2016p

402 468 534 623

738 731 830 909 990 1036

1138 1228 1325

0

500

1000

1500

04 05 06 07 08 09 10 11 12 13 14 15e 16p

3.1% 4.3%

1.6% 0.3%

1.0%

4.3%

14.5%

9.3%

11.0% 10.1%

8.7% 9.6%

5.0%

8.1% 8.7% 8.7% 9.0% 9.0%

10.0%

13.3%

10.8% 10.2%

6.7%

0.1%

5.9% 7.1% 7.3% 7.4% 7.1% 6.9% 7.0%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e 2016p

Agriculture Industry Service GDP Growth


OPE

N D

OO

R P

OL

ICY

ON

E S

TOP

SER

VIC

E

Aftercare Service

Liberal Investment Regime Customer Approach

2. Council for the Development of Cambodia-CDC

5


3. CDC’s Structure

6

H.E. Mr. Keat Chhon Permanent Deputy Prime Minister

1st Vice Chairman

Trouble Shooting

Committee

Samdech Akka Moha Sena Padei Techo HUN SEN Prime Minister of the Kingdom of Cambodia

Chairman

H.E. Mr. Chea Vuthy

Deputy Secretary General

H.E. Mr. Sok Chenda Sophea Minister attached to the Prime Minister

Secretary General

H.E. Mr. Im Sur



Secretary General

H.E. Mr. Sun Chanthol Senior Minister, Minister of Commerce

Vice Chairman

H.E. Mr. Rith Vuthy


H.E. Mr. Chea Vuthy


SEZ FDI ODA

H.E. Mr. Heng Soknang


CAMBODIAN SEZ BOARD


Secretary General

CAMBODIAN INVESTMENT BOARD

H.E. Mr. Chhieng Yanara Minister attached to the Prime Minister

Secretary General

CAMBODIAN REHAB. & DEV. BOARD


4. Investment Incentives

Corporate Tax: 20%

Tax holidays: 6 years ~ 9 years OR Special Depreciation (Reinvestment of Earning)

Full Import Duty Exemption

7


5. Investment Guarantee (1/2)

Investment Law provides full guarantee No discrimination No nationalization No requirements of local equity participation No price controls on products or services No restriction on foreign exchanges No capital control

8


Australia

China

Austria

Croatia

Cuba

Czech

France

Germany

Japan

Kuwait

Laos

Malaysia

Netherland

Pakistan Philippines

N. Korea

S. Korea

Singapore

Switzerland

Thailand

United States

Vietnam

OPEC

Belarus

Cambodia

1. Australia 2. Austria 3. China 4. Croatia 5. Cuba 6. Czech 7. France 8. Germany 9. Japan 10. Kuwait 11. Lao PDR

12. Malaysia 13. Netherlands 14. N. Korea 15. OPEC 16. Pakistan 17. Philippine 18. ROK 19. Singapore 20. Switzerland

21. Thailand 22. USA (OPIC) 23. Vietnam 24. Belarus

5. Investment Guarantee (2/2) Bilateral agreement on the promotion and protection of investments between the Kingdom of

Cambodia and other countries (24)

9


In accordance with article 23 of the Bilateral Investment Agreement between Cambodia and Japan signed in 2007, a Joint Committee has been established and met 12 times.

6. Cambodia-Japan Bilateral Meeting

10


Agriculture 14%

Industries 35%

Infastructure 41%

Tourism 10%

Investment Capital (2011-2015) Total of USD 22.3 billion

7. Committed Investments (by sector)

11

Total 5,763.2 2,965.6 4,962.3 3,933.4 4,643.6

2011 2012 2013 2014 2015 Agriculture 794.5 556.6 1,128.8 264.7 482.6 Industries 1,340.8 1,489.7 1,106.7 2,835.6 919.3 Infastructure 2,782.3 227.8 2,620.8 353.5 3,129.8 Tourism 845.6 691.5 106.0 479.6 111.9

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

Mill

ion

USD

Investments by sector (2011-2015)


8. Committed Investments (by country)

12

Year 2011 2012 2013 2014 2015

Total $5.7 Billion $2.9 Billion $4.9 Billion $3.9 Billion $4.6 Billion

Rank Country % Country % Country % Country % Country %

1 Cambodia 41.24 Cambodia 42.08 Cambodia 66.80 Cambodia 64.00 Cambodia 69.28

2 China 30.55 China 20.69 China 15.68 China 24.44 China 18.62

3 Vietnam 11.99 Korea 9.89 Vietnam 6.10 Malaysia 2.18 UK 3.0

4 U.K 4.30 Japan 9.15 Thailand 4.37 Japan 1.72 Singapore 2.18

5 Malaysia 4.20 Malaysia 6.04 Korea 1.76 Korea 1.66 Vietnam 1.92

6 Korea 2.91 Thailand 4.53 Japan 1.59 Vietnam 1.26 Malaysia 1.61

7 U.S.A 2.47 Vietnam 2.89 Malaysia 1.04 UK 1.13 Japan 1.28

8 Japan 1.15 Singapore 2.59 Singapore 1.03 Singapore 0.89 Thailand 1.18

9 Australia 0.43 U.K 0.51 UK 0.43 Thailand 0.88 Korea 0.21

10 Singapore 0.28 U.S.A 0.42 France 0.27 Australia 0.51 Canada 0.19

11 Others 0.48 Others 1.21 Others 0.94 Others 1.36 Others 0.52


9. Japanese Investments to Cambodia

13

(Million USD)

Chart1

1994-2009

2010

2011

2012

2013

2014

2015

Series 1

147.6

25.9

66.2

271.3

78.9

67.6

59.6

Sheet1

Series 1

1994-2009147.6

201025.9

201166.2

2012271.3

201378.9

201467.6

201559.6


II. ASEAN Economic Community

14


15

• Free movement of goods and services

• Free flow of capital

• Free flow of skilled labor forces

• Production base

• Single market of 630 million consumers

1. ASEAN Economic Community


16

Cambodia will grow

with ASEAN

with Mekong 5

2. Cambodia within Mekong Five and AEC


17

Greater Mekong to have highest proportion of econ active workers by 2050 within ASEAN

3. Emergence of Mekong Five as World Factory

Source: “ASEAN: The Next Horizon – Mekong Implications,” ANZ Bank (2015)


18

4. Flying Geese in Mekong Five



• Roads

• Telecommunications

• Power Transmission Line

GMS Infrastructure Connectivity in

2015-2020

19

5. GMS Infrastructure Connectivity


20

6. Growth of Mekong-Five Market

Population (m) Economies 2010 2015 2020

Brunei 0.4 0.4 0.5

Cambodia 14 15 16

Indonesia 240 252 263

Laos 6 7 7

Malaysia 28 31 33

Myanmar 52 56 59

Philippines 93 101 110

Singapore 5 5 6

Thailand 69 71 72

Vietnam 88 92 96

ASEAN 10 596 631 661

Asia 3344 3491 3619

World 6515 6871 7210

Middle income group (% of population) Economies 2010 2015 2020

Brunei 98 99 100

Cambodia 9 15 21

Indonesia 21 26 30

Laos 11 17 23

Malaysia 40 42 45

Myanmar 9 12 15


Singapore 98 99 100

Thailand 45 47 49

Vietnam 21 28 36

ASEAN 10 26 30 34

Asia 26 31 37

World 28 29 30

Middle income population (m) Economies 2010 2015 2020

Brunei 0.4 0.4 0.5

Cambodia 1 2 3

Indonesia 50 64 79

Laos 1 1 2

Malaysia 11 13 15

Myanmar 5 7 9


Singapore 5 5 6

Thailand 31 33 35

Vietnam 18 26 34

ASEAN 10 154 190 227

Asia 850 1082 1325

World 1844 2010 2177



III. Industrial Development Policy 2015-2025 21

CAMBODIA


22

To provide policy framework and specific mechanism to develop a competitive industrial sector in Cambodia and to achieve its full integration into regional and global value chain.

To capture regional trends and changes in regional architecture (AEC, China+1, Thailand+1, and RCEP/TPP).

To promote a platform for growth focusing on economic diversification, strengthening national competitiveness, and enhancing productivity.

1. Industrial Development Policy (IDP) 2015-2025


23

The Royal Government of Cambodia has determined 4 key priorities to be achieved by 2018 in order to promote and sustain the momentum of Industrial Development as following:

Improving electricity supply to key industrial areas/estates: reduce the electricity tariff from 18.8 cents/kwh in 2014 to 12 cents/kwh and ensure the stability of the electricity supply by reducing the black-out to less than 12 times or 24h/year.

Building multi-modal transport and logistic system to connect to 3 keys industrial corridors namely Phnom Penh- Sihanoukville, Phnom Penh- Bavet, and Phnom Penh- Poi Pet.

Building modern institutions for vocational and technical training / human resources development needed by industries.

Develop and transform Sihanoukville Province into a multi-purpose Special Economic Zone.

2. IDP – Infrastructure for Industrial Development


24

- Review and amend the Law on Investment and other relevant regulations to respond to the concrete needs for developing the industrial sector by way of making the business climate conducive to attracting investment, enabling technology transfer, creating jobs and enhance skills training and increasing value-added;

- Review and revise criteria of selected “potential and quality investment projects” that generate value addition and positive externality for the development and attraction of new industries into Cambodia;

- Consider providing additional incentives for investment projects which are contributing to skills training, research and development and innovation;

3. Law on Investment - IDP Guidance (1/2)


25

- Encourage the preparation of medium-term plan to nurture the growth of SMEs by way of identifying enterprises with good export potentials, developing new products, linking to multinational corporations (MNCs), connecting them to the value chain and regional production networks, and preparing concrete action framework to develop them;

- Consider providing support to SMEs for skill training and investment in machinery or production equipment as well as other incentives taking into consideration the local processing of raw materials; promoting quality of products and modernizing their production chain to link up to multinational companies;

- Further strengthen favorable environment for investment and doing business by improving the regulatory framework, rationalizing the provision of incentives for investment projects, strengthening the good governance and the effectiveness of relevant public institutions, especially the One-Window Service mechanism at the Council for Development of Cambodia (CDC) to become an effective and practical mechanism.

3. Law on Investment - IDP Guidance (2/2)


26

- Pioneer status - SMEs : supporting activities - Incentives for provision of: Accommodation Transportation Canteen Training

4. Law on Investment: What’s New?


27

- Promote the establishment of large industrial parks and clusters by enacting the Law on Special Economic Zone aimed at supporting in a comprehensive way the development of these zones to meet international standards: including infrastructure management system; adequate supply of electricity and clean water; provisions of raw materials and other inputs; trade and transport facilitation; provisions of incentives and other supporting measures to promote investments in SEZs;

- Continue developing industrial zones in provinces, aimed at promoting hubs for SMEs while enhancing their competitiveness by way of supplying as a matter of priority electricity connection, clean water, transportation and logistics links as well as other incentives and facilitation from the government;

5. Law on SEZ - IDP Guidance (1/2)


28

- Take measures to promote more active participation from the private sector to develop physical infrastructure in government approved SEZs so as to ensure their attractiveness for investors seeking opportunities to establish their production bases;

- Set a clear standards and guiding principles on environmental protection and production safety for investment projects located in SEZs and other industrial zones;

- Continue strengthening and streamlining the administrative capacity and institutional framework for managing the operations of SEZs by way of increasing the effectiveness of the One-Window Service mechanism in order to promote the development of specialized SEZs.

5. Law on SEZ - IDP Guidance (2/2)


29

- Effective development, revocation if no development - Timely provision of basic infrastructures - Streamlining administrative procedures : Customs extra territory status Construction permit Environment requirement (EIA) Factory licensing Worker health control Tax registration (ID) C.O. online Master list online

6. Law on Special Economic Zone: What’s New?


IV. Investment Opportunities in Cambodia 30


1) Production, Processing and Commercialization of: Rice, Corn, Cassava, Sugarcane, Rubber, Cashew nut, Pepper and others

2) Livestock Farming and Aquaculture Animal breeding Animal feed production Freshwater and marine aquaculture Processing and trading

Type Cultivated Area (2013) Yield (2013) Cult. Area (2018)

Yield (2018)

Rubber 328,771 ha (P. estate17%, ECL 41%, smallholder 42%)

(Mature: 78,493ha)

85,244 tons >420,000 ha 400,000 tons

Paddy 3,052,420 ha 9,389,961 tons 3,34 million ha 10,85 million tons

Cassava 377,239 ha 7,933,381 tons N/A N/A

Corn 180,327 ha

848,450 tons N/A N/A

31

1. Agro-business


World Heritage Monuments

Open Sky Policy to Siem Reap

Natural beauty - Beach - Islands

Ability to attract “add-on” trips

Angkor Wat Temple World Heritage Site - 1992

Mekong Dolphins in Kｒatie Province

32

Song Saa Private Island

2. Tourism (1/4)


33

2. Tourism (2/4)

Chart1

2008

2009

2010

2011

2012

2013

2014

2015e

Visitor Arrivals (Millions)


2.1

2.2

2.5

2.9

3.6

4.2

4.5

4.7

Sheet1


20082.1

20092.2

20102.5

20112.9

20123.6

20134.2

20144.5

2015e4.7


34

Top ten markets arrivals in 2015

Vietnam China (PRC) Korea (ROK) Lao PDR Thailand U.S.A Japan UK Malaysia France 2015 864,402 629,786 352,506 349,759 294,696 192,522 170,791 138,204 132,784 129,302 2014 803,591 507,860 378,337 404,102 246,140 169,466 193,048 119,011 128,097 126,002 Share% 20.6% 15.0% 8.4% 8.3% 7.0% 4.6% 4.1% 3.3% 3.2% 3.1% Change % 7.6% 24.0% -6.8% -13.4% 19.7% 13.6% -11.5% 16.1% 3.7% 2.6%

(100,000)

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Num

ber o

f Arr

ival

s 2. Tourism (3/4)


Japanese Arrivals

35

Year Number of Japanese Visitors

Total Visitors Share (%) Rank

2008 163,806 2,125,465 7.71 3rd

2009 146,286 2,161,577 6.77 4th

2010 151,795 2,508,289 6.05 4th

2011 161,804 2,881,862 5.60 4th

2012 159,745 3,201,981 5.00 6th

2013 206,932 4,210,165 4.92 6th

2014 215,788 4,502,775 4.79 6th

2015 (e) 194,657 4,725,806 4.12 7th

2. Tourism (4/4)


Competitive labor cost

Tax incentives

Market access

ASEAN Economic Community

36

3. Labor Intensive Industries, processing and manufacturing

http://blogimg.goo.ne.jp/user_image/60/06/ac2261734a99a9c951cf852979fa1fa6.jpg


37

4. Cambodia Special Economic Zones


38

No. SEZ Name Established Land Size (h.a) No. of

Projects Workers

1 Manhattan (Svay Reing) SEZ 29-Nov-06 157 32 23,178

2 Tai Seng Bavet SEZ 04-Apr-07 99 26 8,561

3 Shandong Sunshell Svay Rieng SEZ 01-Jul-13 96 3 2,700

4 Dragon King S.E.Z 25-Oct-12 106.5 2 581

5 Phnom Penh SEZ 19-Apr-06 350 81 13,604

6 Sihanoukville SEZ 17-Mar-08 1,113 74 11,499

7 Sihanoukville Port SEZ 02-Sep-09 70 3 437

8 Sihanoukville SEZ 1 25-Oct-06 178 2 310

9 Neang Kok Koh Kong SEZ 26-Oct-07 335 5 6,569

10 Poi Pet O’Neang SEZ 01-Jun-06 467 5 925

11 Sanco Cambo SEZ 11-Sep-13 66.5 2 N/A

5. List of Operational SEZs


39

Japan’s QIPs No. of Projects Capital ($ Million)

Outside SEZ 42 416

Inside SEZ 74 301

Total 116 717

6. Japanese Investments


V. Reasons to invest in Cambodia

40


Open economy Equal treatment of all investors No requirement of local equity participation No price controls on products or services No restriction on foreign currencies convertibility

Sound macroeconomic environment 6th fastest growing economy in the world during the last two decades (average growth rate: 7.7%) Low & manageable inflation rate (under 5%) Stable exchange rate (USD 1 = 4000 ± 5%)

Competitive labor force Reasonable wage: (minimum wage in 2016: 140 USD) Young and dynamic labor Force (median age 24 years old)

Competitive investment incentives Tax holiday: 0% up to 9 years Low corporate tax: 20% Full import duty exemption (production equipment,

contraction material, production inputs, machineries)

One stop service Information & Application Fast-Track Investment Approval Process: all documents

will be processed within only 28 working days. Customs Duty & Tax Exemption Visa & Work Permit

Strategic location Center of ASEAN: flight time average only 1:30 hour to other ASEAN countries Preferential trading status Cambodia obtains EBA from EU Regional Comprehensive Economic Partnership (RCEP):

ASEAN + China, Japan, Korea, India, Australia & New Zealand

Market access ASEAN Market (AEC): pop. 630 M, GDP $2.5 Tri. ASEAN + China, Japan, Korea, India, Australia & New

Zealand (RCEP): pop. 3.3 B, GDP $17.1 Tri. MFN/GSP 32countries & EU (EBA) Market Access The world market (WTO)

EU (EBA)

41

1. Reasons to invest in Cambodia


42

Source: Inter-censal Population Survey 2013

2. Age Pyramid of Cambodian Population


.

Phnom Penh The Philippines

Singapore

Indonesia

Myanmar Southern China

Manila Bangkok

Kunming

Yangon

Brunei

Jakarta

Begawan

Hanoi Laos

o Vientiane

CAMBODIA

Malaysia Kuala Lumpur

Thailand Vietnam

1h:30 on average

43

3. Strategic Location


44

Direct Flight Tokyo – Phnom Penh

Starting from ……......

Breaking News


45

VI. The Pioneers


どうもありがとうございました H.E. Mr. SOK Chenda Sophea, Secretary General Email: [email protected] H.E. Mr. CHEA Vuthy, Deputy Secretary General Email: [email protected]

H.E. Mr. HENG Soknang, Deputy Secretary General Email: [email protected] Information: Email: [email protected] Website: www.cambodiainvestment.gov.kh 46

mailto:[email protected]:[email protected]:[email protected]:[email protected]://www.cambodiainvestment.gov.kh/

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