Non-Governmental Organizations in Cambodia have played a pivotal role in the nation’s development and reconstruction since the early 90s. What are their current role, level of importance, and ease of setup?
History of NGOs in Cambodia
Major international NGOs, such as the International Rescue Committee, Médecins Sans Frontières, Oxfam and UNDP have been active in Cambodia since the fall of the Khmer Rouge, but foreign aid and the establishment of NGOs were limited during the 1980s due to the Soviet orientation of the People’s Republic of Kampuchea, as well as more importantly its lack of international recognition.
This began to change with the establishment of the State of Cambodia, the Paris Peace Accords and the opening up of the previously state-run economy. The NGO boom can therefore be traced to after the elections of 1993 when after almost 50 years of turmoil international organizations finally felt the nation was stable enough to return.
This led to a flock of International NGOs as well as homegrown ones entering the country, and while less important than during the initial post-war reconstruction period still account for a sizeable portion of the Cambodian economy.
How many active NGOs are there in Cambodia?
According to the Cooperation Committee for Cambodia, there were around 3,500 non-governmental agencies in Cambodia in 2013, which ranked Cambodia second only to Rwanda for NGOs per capita (1 for every 10,000 people).
Despite Cambodia’s rapid economic growth which averaged 7.7 percent between 1998 and 2019, this number has now increased to over 5,000 registered NGOs currently, although how many are active is unknown.
The non-governmental sector in Cambodia is thus numerous and diverse, covering many areas from human rights, the environment, and economic development, to smaller grass-roots projects based on the promotion of sports, to supporting single villages.
Despite this growth, there have been suggestions of ‘aid fatigue’ as well as the opinion among the government and the press that many could and should convert into for-profit organizations to better help with Cambodia’s long-term tax development.
To read more about the tax rates in Cambodia click here.
How important are non-governmental organizations to the Cambodian economy?
NGOs tend to be the recipients of a vast amount of foreign aid in Cambodia, which reached almost $1 billion as of 2019 according to the World Bank. This has meant up to 28 percent of government expenditure being as a result of foreign aid.
To fulfill their missions, NGOs more often than not require at least some services from the commercial sector. Therefore there are thus significant business opportunities for the private sector to work with non-governmental organizations in what is in effect a $1 billion industry in Cambodia.
NGOs in Cambodia are also still an extremely important source of employment within the country, with some of the bigger organizations paying international salaries. And this can be controversial it also means more money is being injected into other areas of the economy, such as real estate and the service industry.
It should also be noted that Cambodians also benefit greatly from employment in the non-governmental organization sector, with estimates ranging into the tens of thousands for locals working in, for, or indirectly within the sector. This is also ignoring those citizens directly benefiting financially, or logistically from the various programs.
How easy is it to set up an NGO in Cambodia?
The number of NGOs in Cambodia is partially related to the relative ease with which they can be set up, particularly in comparison to countries such as China, or Vietnam where registration is much more cumbersome and regulated.
Essentially there are two types of NGOs in Cambodia, International NGOs, and local NGOs, both of which have different rules concerning their setup.
International NGOs must enter into a memorandum of understanding (MOU) with the Ministry of Foreign Affairs (MOFA) and once registered enjoy a legal personality. Local NGOs on the other hand must be founded by a Cambodian and are usually controlled by Cambodians. These are registered at the Ministry of Interior but do not have the status of a legal personality.
All International NGO registrations can be checked at the Ministry of Foreign Affairs, while local NGOs can be checked at the Ministry of Interior.
The Law on Associations and Non-Governmental Organizations was promulgated by Royal Kram No. KS/RKM/0815.010 on 12 August 2015 (“LANGO”).
There are several other stipulations and regulations for the setting up of an international NGO, such as the requirement of a Project Agreement with the MOFA, but unlike in other jurisdictions, these can be handled by business consultancies in much the same way as one would register a “normal” company in Cambodia.
To read more about registering a company in Cambodia click here.
Prices for registering an NGO vary greatly depending on the company you use. Cambodia Investment Review reached out to a leading consultancy and was quoted $2,000 for the setting up of an NGO in Cambodia, aside from government fees.
This article is part of Cambodia Investment Review’s Explainer series. A simple guide to everything you need to know about business and investment in Cambodia.