Cambodia Market Entry

Cambodia Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

With regard to Asian customs, it is possible to clearly recommend the use of local representatives who are familiar with the local environment for the sale of foreign goods. Cambodian companies, joint ventures or companies wholly owned by a foreign entity can also be partners of Czech companies. Many European companies doing business in Cambodia, including local companies, are associated in the European Chamber of Commerce EuroCham. In addition, the Chamber is active in organizing regular business presentations and seminars, publishes publications informing about doing business in Cambodia and also offers other services for companies interested in entering the local market as part of paid services.

According to cheeroutdoor.com, import duty is paid on all goods (except as provided by law or the relevant authorities) that cross the borders of Cambodia, in the amount of 0% to 35%. Cambodia has been a member of the World Trade Organization (WTO) since 2004 and applies the most favorable national tariffs for WTO members. Cambodia is also a member of the ASEAN Free Trade Area (AFTA) and applies the tariffs set by the ASEAN Agreement on Trade in Goods. Export duty is imposed on only a few commodities, such as raw timber, rubber, unworked precious stones and certain aquatic products.

In August 2020, the decision to partially withdraw favorable tariff preferences unilaterally granted to Cambodia by the EU under the Everything But Arms (EBA) regime entered into force. More information is available on the website of the European Commission. Detailed information regarding import and export conditions can be found on the Cambodia Customs website. Information on customs and other rates can also be found here.

Regarding the distribution of goods in the trade network, it should be remembered that Cambodia is a developing market and distribution in many cases also takes place informally. However, Cambodia’s retail landscape is undergoing rapid transformation. Cambodia usually does not impose major restrictions on foreign participation in the import, export and distribution sectors. In addition to traditional shops, goods are increasingly sold in small Western-style malls, supermarkets and malls. Importers can apply to the Ministry of Commerce for exclusive rights to import branded products. The use of an intermediary to sell foreign products is the most common form of cooperation, the franchise model is also common.

Forms and conditions of operation on the market

Cambodia does not specify restrictions for establishing a company, however, many must obtain a license or permit from the relevant institutions (banking and financial institutions, travel agencies, real estate agencies, telecommunications companies, industrial plants, etc.). Every new business entity must be registered with the Ministry of Commerce of Cambodia (15 days before starting operations). Registration usually takes 11 working days after all required documents have been submitted. Subsequently, it must be registered with the Tax Office (General Department of Taxation) and the Ministry of Labor and Vocational Education. The establishment, operation, management and registration of a business entity in Cambodia are governed by the Law on Business Companies and the Law on Business Registration. In accordance with them, the following forms of organizations can be established in Cambodia:

  • limited liability company (sro) – can have 1-30 shareholders and is managed by a board of directors. The minimum registered capital is 4 million KHR (approximately 1000 USD). If there is only one shareholder, it is a single member private s.r.o., if there are more shareholders it is a private s.r.o. There are no ownership restrictions, the s.r.o. can be 100% owned by a foreign entity and has the same rights as a Cambodian company with one exception and that is impossibility of land ownership.
  • a branch of a foreign company – can perform the same activities as a limited liability company, i.e. enter into contracts for the purchase and sale of goods and services and deal with production, processing, construction, etc. A significant disadvantage of this form of business is the full responsibility of the parent company for the debts and losses of the branch in Cambodia. The branch must be managed by at least one manager. There is no minimum capital for establishment.
  • representative office of a foreign company – its activity is limited to establishing business ties and obtaining information for the parent company. The representative office is not an independent legal entity, it cannot enter into contractual relations for the purpose of sale, purchase or provision of services and it cannot make any profit. It must be fully financed by the parent company.

There are no restrictions on the repatriation of profits abroad. The Foreign Investment Act guarantees investors the right to purchase free currencies through the official banking system and free repatriation of profits abroad. Further information on how to proceed can also be found, for example, on the website of the legal office of DFDL Cambodia.

Marketing and communication

HSP can be used for advertising, i.e. advertising in print and advertising shots on TV or radio. According to surveys, the most effective use of television advertising is, above all, in larger cities. In addition to television, the younger and middle generation is also above average influenced by the Internet, especially social networks (especially Facebook). Billboards and LCD advertising panels are increasingly being used. The most suitable marketing channel from the point of view of targeting efficiency and price costs is the social network Facebook. The establishment and regular maintenance of a Facebook profile is almost a necessity if a company or institution wants to reach the widest possible range of customers in Cambodia. Published entries may be published in English but should be accompanied by a Khmer translation.

Issues of intellectual property protection

Cambodia recognizes the importance of protecting intellectual property rights, including trademarks, patents and utility models, industrial designs, trademarks and copyrights. Cambodia is a long-standing signatory to the Paris Convention for the Protection of Intellectual Property Rights, the Stockholm Convention, the Agreement on Trade-Related Aspects of Intellectual Property Rights and the Convention on Biological Diversity. In connection with its accession to the WTO (2004), Cambodia adopted several laws regulating rights related to intellectual property: the Law on Trademarks, Trade Names and Unfair Competition (2002) and the Implementing Regulation (2006), the Law on Patents, Utility Model Certificates and Industrial Design ( 2003) and Implementing Regulation (2006), Copyright and Related Rights Act (2003). In 2008, Cambodia adopted the Law on the Protection of Variety Rights and in 2014 the Law on Geographical Indications. Although the laws are still at an early stage of development, effective mechanisms for the registration and protection of intellectual property rights are already in place.

In practice, however, there are still frequent cases of infringement of intellectual property rights both in the area of ​​trademarks and, for example, works of art or software, and their enforceability still lags behind legislative enshrinement. More information can be found on the Cambodia Development Council website.

Public procurement market

As part of the public finance reform, in January 2012, Cambodia adopted the Law on Public Procurement, the main purpose of which was to introduce a unified public procurement system and thus ensure proper and transparent handling of state finances. Exceptions are contracts related to national defense and public safety. However, the practice continues where many important contracts are not published and it is very difficult for the public to obtain information about their results. Requests for bribes by government officials are frequent. In limited cases, some important tenders and public contracts are published in the daily press in the form of advertisements (for example, the Phnom Penh Post or on the websites of ministries – see Internet and information sources.

Payment terms, payment ethics and resolution of commercial disputes

Resolution of commercial disputes

Regarding foreign investment disputes, Cambodia became a member of the International Finance Corporation in March 1997 and signed the Multilateral Investment Guarantee Agency agreement (MIGA). This agreement includes an international dispute resolution mechanism.

Local market risks, payment morale

Cooperation with Cambodian companies is often limited by a lack of liquid funds, and the possibility of delays in payment must be taken into account. That is why guaranteed payment instruments such as letters of credit and payments against documents (L/C) must be used in business relations. Another major problem is the difficult law enforcement and related impunity and widespread corruption (ranked 157th out of 180 countries ranked by Transparency International in 2021). Doing business in Cambodia is also greatly complicated by complex bureaucratic processes, high electricity prices and a lack of qualified personnel. In terms of territorial risk according to the OECD classification , Cambodia is rated 6 out of 7.

Cambodia’s dispute resolution system is usually based on conciliation and mediation. Duties are often emphasized more than rights. This traditional approach to dispute resolution continues to have a significant influence on the adjudication of disputes in Cambodian courts. See DFDL for more details.

Visas, fees, specific conditions for traveling to the territory

Current conditions on the website of the Embassy of the Czech Republic in Phnom Penh.

The passport must be valid min. 6 months from entering the country. Citizens of the Czech Republic also need an entry visa. A tourist visa for 30 days (with the possibility of extension by 1 month) can be obtained in the following ways:

  • after arrival on all mezins. airports and at all land terminals. transitions. 2 photographs (4x6cm) must be attached to the completed application. $30 fee.
  • via the Internet (so-called e-visa) – on the website www.evisa.gov.kh, select the language Czech and proceed according to the instructions. The fee for a 30-day tourist visa is USD 37 (incl. USD 7 handling fee), payable with a valid credit card. Note: e-visa can be used to enter Cambodia at all airports, but only at 3 land crossings: Poipet, Bavet, Cham Yeam.
  • at any embassy of the Kingdom of Cambodia abroad. Fees may vary from office to office.

Option 1) and 3) also allows you to apply for a 30-day work/business visa. The fee for this visa is 35 USD and the visa can be extended indefinitely.

In case of loss of a travel document with a Cambodian visa and an entry stamp, it is necessary to obtain an exit visa in a replacement travel document (NCD) issued by the Embassy of the Czech Republic in Phnom Penh. This exit visa is issued against a fee by the Immigration Office of the Ministry of the Interior of Cambodia, usually within 3 days. This office also makes any changes to the visa during its validity in the territory of Cambodia.

It is practical to have photocopies of personal documents, incl. visas and airline tickets, and have these documents scanned and accessible from the Internet. It will simplify the situation in the event of a loss.

Foreigners are a favorite target of thieves and pickpockets. A common method of theft is ripping or cutting the straps of backpacks and bags from passing motorcycles. In case of loss or theft of money, it is possible to use the dense network of Western Union branches to obtain cash.

In the capital, Phnom Penh, the most common forms of transport are taxis or tuk-tuks, which can also be ordered by e-mail. applications (e.g. Grab or PassApp). Outside the capital, the most common mode of transport is again taxis, or buses and minivans, which can be booked, for example, on the CamboTicket website. Car rental options are very limited, and a Cambodian driver’s license is also required.

In general, it is not recommended to consume tap water and use bottled water.

Employment of citizens from the Czech Republic

A valid work/business visa and a valid work permit are required to work in Cambodia. A work/business visa can be obtained on arrival at all international airports and all international land crossings or at any embassy of the Kingdom of Cambodia abroad. The employer must apply for a work permit for its foreign employees at the Department of Labor and Social Affairs. It is in the interest of every citizen of the Czech Republic who works in Cambodia to monitor any changes and consult with the relevant Cambodian authorities.

In the manufacturing sector, a minimum wage is in place, which was $192 in 2021. Mandatory employer contributions to the health and social insurance system are not introduced, and foreign workers are recommended to arrange their own health insurance service.

Fairs and events

Several major fairs are held in Phnom Penh every year. It should be noted that the participation of foreign exhibitors and the scope of the fairs do not correspond to the usual standards of other East Asian fairs. Nevertheless, participation in the fair is necessary if there is a serious interest in penetrating the Cambodian market.

Among the most important regularly organized trade fairs are:

  • Agri Cambodia (Phnompenh) – agriculture, agricultural technology, food and animal husbandry
  • CamBuild (Phnom Penh) – construction industry, industrial and agricultural technologies, energy, water management
  • CamFood and CamHotel (Phnom Penh) – food and beverage, tourism, hospitality
  • Cambodia Property Expo (Phnom Penh) – real estate fair
  • Cambodia Architect & Decor Expo (Phnompenh) – architecture, design, building materials

At the height of the Covid-19 pandemic, most events were canceled, currently the situation is gradually returning to normal. A continuously updated and supplemented list of fairs and exhibitions can also be found here.

Cambodia Market Entry