Cambodia Investment Review
AsiaLink will launch its latest “Doing Business in Cambodia” guidebook, designed to support Australian firms exploring opportunities in the Cambodian market. The guide, part of a broader series targeting ASEAN, provides insights into market dynamics, regulatory requirements, and potential pitfalls, aimed at assisting Australian businesses with their expansion plans. The launch featured a podcast discussion with industry veteran Hugh Darwell, Chairman and Managing Director of Acclime Cambodia, who shared his extensive experience and practical advice for navigating the Cambodian business landscape.
Opportunities in Education, Agriculture, and Tourism
According to Hugh Darwell, Australian firms have strong prospects in three key sectors in Cambodia: education, agriculture, and tourism. He highlighted the potential for mid-range educational institutions catering to the growing middle class. “There are several international schools in Phnom Penh, but there’s a real gap in the $5,000 to $7,000 fee range. This segment offers great potential, especially as Cambodian parents increasingly prioritize quality education for their children,” Darwell noted.
In agriculture, Australian exports such as beef, seafood, and dairy products are well-received in the Cambodian market. “Australian baby formula and milk powder are particularly popular here, and there is a steady demand for quality food products,” Hugh Darwell added. On the tourism front, Cambodia’s cultural heritage and natural beauty continue to attract international visitors, presenting opportunities for Australian investors in hospitality and related services.
Simplified Business Setup and Regulatory Environment
One of the primary advantages of doing business in Cambodia is the ease of setting up a company compared to other markets in the ASEAN region. “Cambodia allows 100% foreign ownership in most sectors, which is a significant draw for Australian businesses,” Darwell explained. He elaborated that while the business registration process is straightforward, taking around four to six weeks, it requires compliance with local regulations, including tax registration and company documentation.
Read More: 5 Key Points for Selling Cambodia to Australian Investors
Darwell emphasized the importance of working with a local partner or consultancy for smoother navigation through the regulatory processes. “There’s an online portal for company registration, but many firms struggle when trying to handle the process remotely. It’s best to engage a local provider who understands the intricacies of the system,” he advised. He also pointed out that the Cambodian government does not mandate a resident director, unlike many other markets, providing more flexibility for foreign investors.
Regarding banking and financial transactions, Hugh Darwell noted that Cambodia’s banking system has made significant strides in recent years. “It’s quite simple to open a bank account here, and the process is much faster than in many neighboring countries. Transfers are efficient, and there are no restrictions on moving money in and out of the country,” he said.
Leveraging Trade Agreements and Local Expertise
Cambodia’s participation in key trade agreements, including the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) and the Regional Comprehensive Economic Partnership (RCEP), offers Australian firms tariff benefits and streamlined access to the Cambodian market. “These agreements generally allow for customs-free entry of goods, but it’s crucial to ensure compliance with documentation requirements to avoid unexpected duties,” Darwell warned. He highlighted that audits can occur after goods have been sold, making it vital for businesses to maintain accurate records.
Darwell also addressed the importance of understanding cultural differences when doing business in Cambodia. “Australians tend to be very direct, but in Cambodia, building relationships and taking a more patient, inclusive approach works better,” he shared. He emphasized that clear, simple communication is key, particularly given the language barriers that may arise.
For Australian businesses considering market entry, Hugh Darwell’s top advice is to visit Cambodia and conduct thorough market research. “It’s essential to see the market firsthand and understand the local landscape before making any commitments. Engaging a local partner or consultancy can help mitigate risks and streamline the setup process,” he concluded.
