Cambodia issued a sub-decree for the complete implementation of Cambodia’s new Law on Investment – which has been in force since October 15, 2021 – to attract and boost both local and foreign direct investment in the country, said a statement released by the government.
The sub-decree would entitle relevant government institutions, private sector investors and business people to follow and implement the new investment law more effectively as the legal frameworks provide clear-cut guidelines for investment and set clear in-charge bodies, investment projects and incentive conditions.
Cambodia’s Secretary General of CDC—Cambodia’s highest decision-making body for private and public investments stated that the sub-decree sets the clusters of investment projects incentivized on inputs for production to supply domestic markets, a cluster of investment projects incentivized on customs, special duties and Value Added Tax (VAT) but un-incentivised on taxation.
”The implementing sub-decree of the (investment law) has been signed. Both the law promulgated and the implementing sub-decree will provide a transparent, predictable and enabling legal framework for investments. The latter will contribute significantly to the socio-economic development of Cambodia.
SECRETARY GENERAL OF CDC CAMBODIAwww.cdc.gov.kh
Investment projects on horticulture, subsidiary and industrial crops, plant breeding, production of domestic animals, manufacture of animal feed, integrated farming, aquaculture, agro-processing, boiler manufacturing and agricultural dryer manufacturing are in the cluster that receives incentives on inputs of production for supplying the domestic markets.
The sub-decree is also attached with its third appendix that states that bonded warehouses, million distribution centers and million in-building solutions worth $60 million, $10 million and $20 million respectively are among projects that are incentivized on customs, special duties and VAT, but not incentivized on taxation.
The first appendix of the sub-decree also sets the projects that are not incentivized such as crop and animal production, and other agricultural activities including rice crops with investment capital of less than $2 million or area of less than 500 hectares of land, vegetable crop projects with capital less than $1 million do not get incentives.
”The sub-decree would enable all stakeholders to fully implement the new Law on Investment.
SECRETARY GENERAL OF CDC CAMBODIAwww.cdc.gov.kh
There was expectantly a wait for the sub-decree as the implementation of the new investment law even though it has been already put in place as its implementation has faced controversies in terms of taxation, customs and other stuff since promulgation. So, there must be this to be attached with the law for the effective implementation.
The new Law on Investment would enable provinces to attract more investments as it decentralizes the authority from the national to municipal-provincial levels—municipal-provincial sub-investment committee—to approve investment projects worth $5 million or less and investors to get more incentives and care-taking while running projects.
President of Singapore Club Cambodia (SCC) Andrew Tay believed that the document would enable investors to proceed their investment projects more efficiently and effectively.
The new investment law would enable the government to attract more foreign investors into the country as it has provided more incentives such as longer tax holidays or tax breaks and set more attractive minimum investment capital as these things look more competitive incentives given by other countries.
Article 50 of the sub-decree stipulates that qualified investment projects on new automobile assembly to supply the domestic markets are incentivised by reducing 50 percent of customs tax, special duties and VAT if their assembly parts are finished goods with domestically-supplied components of at least three percent and fulfill two of the three requirements.
The three requirements include using at least 400 assembly parts per unit of automobile, investment capital from $5 million up and employing at least 150 workers, according to the sub-decree adding that the reduction is offered up to 90 percent if investors in the category are able to fulfill other requirements set in the sub-decree.