Domestic investors

Phnom Penh, Cambodia. Photo by B2B Cambodia

Cambodia has shown strong economic performance marked by rapid growth and poverty reduction. However, this success has largely depended on a small number of firms, many of which are foreign investors, concentrated in just a few sectors. To ensure more sustainable and inclusive development, greater efforts are needed, including diversifying both the sources and sectors of foreign investment, boosting domestic investment to help bridge the gap in the “missing middle” of medium-sized enterprises.¹

By October 2024, the Council for Development of Cambodia (CDC) had approved 31 new investments and production expansions with a combined capital exceeding $226 million. The domestic investors were reported at 29.47 percent.² Noticeably, the government actively encourages Cambodian entrepreneurship through direct financing and co-financing schemes to bolster economic resilience, promoting sustainable, inclusive development,³ as well as introducing a new Investment Law that intends to make Cambodia more attractive by providing more incentives, guarantees, and protections for domestic investors in accordance with international law and standards.⁴

Legal and Policy Framework on Investment of the Kingdom of Cambodia

Cambodia maintains an open legal regime for investment. According to the Council for the Development of Cambodia (CDC), the laws and regulations are created to attract and promote quality, effective, and efficient investments. In Cambodia, the first investment law was enacted in 1994,⁵ which was set to govern all investment projects made by investors who are Cambodian citizens and/or foreigners in Cambodia. Besides, it was also encouraging investments in 9 important fields.

In 2003, the Law on the Amendment of the Law on Investment amended some articles in the existing 1994 Investment Law to make the meaning clearer and more comprehensive. Additionally, this law is also set to encourage more investment and create a fairer balance for the investment regime in Cambodia.⁶

Noticeably, a sub-decree no.111 on the implementation of the law on the amendment of the law on investment of the Kingdom of Cambodia was effective in 2005. This sub-decree aimed to further supplement and govern the investment law to further promote investment in Cambodia by domestic and foreign investors. The sub-decree also officially defined “Cambodian Investor” as an investor who is a Cambodian citizen or who is a Cambodian Entity.⁷ Furthermore, it is also clarified that all status of Qualified Investment Projects (QIP) to which all investors must apply to receive investment incentives.⁸

On 15 October 2021, the Law on Investment was established to replace the law of 1994 and amendments of 2003, and to establish an open, transparent, and predictable legal framework to attract and promote quality, effective, and efficient investments, both domestic and foreign investors in Cambodia.⁹ The law contains 12 chapters and 42 articles which aim to (1) increasing Cambodia’s competitiveness; (2) modernizing and increasing the productivity of local industries and strengthening connectivity with the regional and globally supply chains by promoting increased capital inflows; (3) establishing an investment incentive regime that is transparent, predictable, non-discriminatory and competitive that supports socio-economic policies; and (4) providing protection to investor’s rights and legitimate interests through the establishment of a comprehensive and equitable legal framework in line with the national interests.¹⁰ Furthermore, this new investment law also features five key features such as:¹¹

1. Allowance of registration for two new types of investment projects: EQIP (Expanded Qualified Investment Projects) & GIP (Guaranteed Investment Projects)
2. Investment guarantees and protections
3. Incentives for investment sectors and activities
4. Investment incentives for QIP
5. Approval for private investments and settlement of disputes

Sub-Decree No. 124 ANKr.Bk, effective from 2 October 2018, aims at incentivizing the SMEs in six priority sectors, ranging from agro-cultural products to IT services, and those located in the SME Cluster Zones, including enterprises in the process of developing Cluster Zones.¹² The incentives include an exemption from tax on income for three years for newly registered enterprises and five years if additional requirements are fulfilled. To assist the implementation, the Ministry of Economy and Finance issued Prakas No.159 in 2020, setting out guidance, conditions, and procedures to request the tax incentive.¹³ It is important to note that SMEs are mostly local investment and domestic-consumption oriented, while large enterprises or heavy industries are a common type of foreign investment.¹⁴

Government support for domestic investment

Based on the Pentagonal Strategy-Phase I, the Royal Government of Cambodia focuses on long-term socio-economic development, aiming to elevate Cambodia to a high-income country by 2050. One of the five strategic objectives is to strengthen private sector governance and promote a favorable environment for investment.¹⁵ As a result, Cambodia’s investment ecosystem has expanded beyond the legal framework, with a range of public- and private-sector support mechanisms designed to help domestic investors. 

Noticeably, the SME Bank of Cambodia is a state-owned, policy-driven institution established to improve access to finance for SMEs in priority sectors and to provide effective and transparent financing schemes that support SME development, promote economic diversification, and boost exports in line with government policy.¹⁶ While the private sector is also encouraged to invest,¹⁷ the bank plays a key role in facilitating domestic investment. In 2023 alone, it disbursed around $490 million in loans to over 3,200 enterprises.¹⁸

Credit Guarantee Corporation of Cambodia (CGCC) is also a state-owned enterprise established by a Sub-Decree No. 140 ANKR.BK in 2020 to improve financial inclusion and develop the growth of SMEs. ¹⁹ It mitigates lending risks through the Co-Financing Guarantee Scheme (CFGS) to support SMEs in enhancing their access to formal loans for both working capital and investment or business expansion.²⁰

Cambodia introduced Special Economic Zones (SEZs) in 2005 through Sub-Decree No. 148 on the Establishment and Management of Special Economic Zones.²¹ SEZs are designed to encourage investment and boost export-oriented manufacturing by offering various benefits such as tax exemptions and improved logistical support. Even though the primary purpose of these zones is to attract foreign investment, the government supports the development through financial incentives, land allocation, and the creation of a favorable regulatory environment to attract domestic investors. ²² There are three types of SEZs such as Export Processing Zones (EPZs), Special Economic Zones (SEZs), and industrial parks.²³ There are 69 SEZs, but only 29 are actively operating, mainly based in four major cities such as Phnom Penh, Bavet, Sihanoukville, and Poipet.²⁴

Top Sectors 

Private sector investment plays a crucial role in Cambodia’s infrastructure development, with key sectors attracting investment, including manufacturing, tourism, and real estate.²⁵  Additionally, the government has identified three priority sectors for Public-Private Partnership (PPP) projects from 2025 to 2035: transportation and logistics, energy, and public services (clean water supply and waste management), all of which are expected to attract significant private sector investment.²⁶

The manufacturing sector experienced a robust growth in 2024, reaching a new high of 2,316 factories, and plays a significant role in driving Cambodia’s economic growth with an estimated growth of 9.7 percent.²⁷ Furthermore, there is an increase in garment manufacturing products by 8.6 percent and non-garment manufacturing products by 10.8 percent, supported by external demand and investment.²⁸

The tourism sector stimulates investment and improves the business environment in Cambodia.²⁹ In 2024, tourism contributed about 9.4 percent to the country’s gross domestic product (GDP) and earned gross revenue of $3.63 billion.³⁰ Recently, the government, through the National Tourism Development Committee (NTDC), has also announced the development of the “Sacred Tourism 2025-2035” policy to attract investors and position Cambodia as a premier global tourism destination.³¹ 

Domestic investors play an essential role in reinvesting in the real estate sector.³² The Cambodian Government has introduced strategic measures to support the housing market’s rebound, including a registration tax exemption for first-time homebuyers purchasing homes valued under $70,000. This policy aims to encourage more domestic investment.³³ In 2024, Cambodia received nearly $7 billion in investment from domestic and foreign investors on 414 investment projects, with domestic investors gradually investing in the real estate sector and developing their housing sector.³⁴

Related to domestic investors

• Investment
• Investment policy and regulations
• Foreign investors