Cambodia’s Investment Law Explained: What Changed and Why It Matters (2025 Guide)

In 2021, Cambodia introduced a new Investment Law that reshaped the country’s foreign direct investment (FDI) landscape. Replacing the 1994 law (amended in 2003), this legislation modernizes the Kingdom’s investment framework to align with global standards, regional integration, and post-pandemic recovery goals.

In this guide, we’ll break down the key changes in Cambodia’s Investment Law, explain what they mean for foreign investors, and show how Adaeng Development Co., Ltd. can help you navigate the new environment with confidence.

Why a New Investment Law?

Cambodia’s previous investment law was nearly three decades old. While it helped attract early-stage FDI, it lacked the flexibility and clarity needed for today’s fast-evolving global economy.

The Law on Investment of the Kingdom of Cambodia (2021) was enacted to:

Enhance transparency and investor protection
Promote high-value, sustainable investments
Streamline procedures and reduce bureaucracy
Align with ASEAN and WTO commitments
Support Cambodia’s transition to an upper-middle-income economy

Key Changes in the 2021 Investment Law

1. Expanded Investment Incentives

The new law introduces a more flexible and tiered incentive system, including:

Tax holidays of up to 9 years (previously capped at 6 years)
Special depreciation and investment expense deductions
Customs duty exemptions on imported production equipment and raw materials
VAT exemptions for certain inputs and construction materials

Incentives are now tailored to the type of project, sector, and location, encouraging investment in priority areas like green energy, digital tech, and rural development.

2. Introduction of Investment Project Categories

The law defines three types of investment projects:

Qualified Investment Projects (QIPs): Eligible for tax and customs incentives
Expanded QIPs: Existing QIPs that expand operations
Guaranteed Investment Projects (GIPs): Not eligible for incentives but benefit from legal protections

This classification provides clarity and flexibility for investors at different stages of growth.

3. Priority Sectors and Activities

The law identifies priority sectors that receive enhanced incentives, including:

Renewable energy and green infrastructure
Digital technology and innovation
Agro-processing and food security
Education and vocational training
Healthcare and pharmaceuticals
Logistics and value-added manufacturing

Investments in these sectors may qualify for longer tax holidays, faster approvals, and additional support.

4. Decentralized and Digitalized Registration

The new law streamlines the investment registration process by:

Allowing online submission via the Cambodia Data Exchange (CamDX) platform
Empowering sub-national authorities to approve smaller projects
Reducing approval times from months to as little as 20 working days

This makes it easier for SMEs and regional investors to enter the market.

5. Stronger Investor Protections

The law reinforces protections for both domestic and foreign investors, including:

Non-discrimination between local and foreign investors
Protection against expropriation without fair compensation
Right to freely remit profits and capital
Access to dispute resolution mechanisms, including international arbitration

These provisions enhance investor confidence and legal certainty.

6. Environmental and Social Responsibility

The law encourages sustainable investment by:

Requiring Environmental and Social Impact Assessments (ESIAs) for large projects
Promoting green and inclusive growth
Supporting skills development and local employment

This aligns with Cambodia’s commitment to the UN Sustainable Development Goals (SDGs) and ESG standards.

What the New Law Means for Foreign Investors

📈 More Opportunities, More Clarity

The 2021 law opens the door to new sectors and regions, especially in digital, green, and rural development. It also provides clearer rules and faster processes, reducing uncertainty for foreign investors.

💼 Competitive Incentives

Cambodia now offers some of the most generous investment incentives in ASEAN, especially for high-impact sectors. This levels the playing field with neighbors like Vietnam and Thailand.

🛡️ Enhanced Legal Security

With stronger protections and access to international arbitration, foreign investors can operate with greater peace of mind.

🌍 Regional Integration

The law supports Cambodia’s role in ASEAN, RCEP, and global supply chains, making it a strategic base for regional operations.

How to Register a Qualified Investment Project (QIP)

Here’s a simplified overview of the QIP registration process:

Prepare Investment Proposal
- Business plan
- Financial projections
- Environmental and social impact summary
Submit Application to the Council for the Development of Cambodia (CDC)
- Via the CamDX portal or in person
CDC Review and Approval
- Evaluation of eligibility, sector, and compliance
- Approval within 20–30 working days
Receive Registration Certificate
- Grants access to tax and customs incentives
Post-Approval Compliance
- Submit regular reports
- Maintain employment and environmental standards

Adaeng Development can assist with every step—from feasibility to filing and follow-up.

Case Study: Solar Energy QIP in Kampong Speu

A Singaporean investor partnered with Adaeng Development to launch a 10 MW solar farm in Kampong Speu. With our support, the project:

Qualified as a QIP under the renewable energy priority sector
Secured a 9-year tax holiday and customs exemptions
Completed registration in under 30 working days
Created 60+ local jobs and reduced carbon emissions

This is just one example of how the new law enables impactful, profitable investment.

Common Mistakes to Avoid

Assuming old incentives still apply—the 2021 law replaces previous frameworks
Failing to align with priority sectors—incentives are now sector-specific
Skipping due diligence on land, licenses, or partners
Delaying registration—incentives only apply after QIP approval

Adaeng Development helps you avoid these pitfalls with expert guidance and local insight.

Why Work With Adaeng Development?

At Adaeng Development Co., Ltd., we specialize in helping foreign investors navigate Cambodia’s evolving legal and investment landscape. Our services include:

Investment structuring and QIP registration
Sector analysis and incentive optimization
Legal compliance and licensing
Land acquisition and project development
Government liaison and stakeholder engagement

We’ve helped clients from Europe, Asia, and North America launch successful ventures across Cambodia’s most promising sectors.

Explore our Work With Us page to learn how we can support your investment journey.

Conclusion: A New Era for Investment in Cambodia

Cambodia’s 2021 Investment Law marks a turning point in the country’s economic development. With clearer rules, stronger protections, and smarter incentives, the Kingdom is ready to welcome a new wave of high-quality, sustainable investment.

Whether you’re launching a startup, expanding your operations, or entering a joint venture, now is the time to act—and Adaeng Development is here to help you every step of the way.

Ready to invest in Cambodia’s future? Contact us today for a personalized consultation.