Key Factors to Consider Before Investing in Cambodia

Cambodia has emerged as one of Southeast Asia’s most promising investment destinations, thanks to its strategic location, young workforce, and increasingly investor-friendly policies. Over the past decade, the Kingdom has consistently outperformed expectations in attracting foreign direct investment (FDI), positioning itself as a rising star in the global investment landscape.

Cambodia’s FDI Performance: A Closer Look

Cambodia’s FDI performance has been nothing short of impressive. According to the Investment Monitor’s 2022 Inward FDI Performance Index, Cambodia achieved a score of 3.6, meaning it attracted more than three times its expected share of global greenfield FDI based on its GDP. This placed the country among the top 25 FDI performers worldwide, a remarkable feat for an emerging economy.

Historically, Cambodia reached a peak FDI-to-GDP ratio of 14.1% in 2012, and nearly matched that figure in 2020 with 14%, despite the global economic slowdown caused by the Covid-19 pandemic. While FDI inflows dipped in the immediate aftermath, the country has shown strong signs of recovery. In 2021 alone, Cambodia attracted $41 billion in cumulative FDI, representing an 11.2% increase from the previous year.

The top contributors to Cambodia’s FDI include China, South Korea, Japan, Vietnam, Singapore, and Malaysia, with investments flowing into key sectors such as finance, manufacturing, real estate, hospitality, agriculture, and energy.

Economic Outlook: Growth Amid Global Uncertainty

Despite the challenges posed by the pandemic and global economic headwinds, Cambodia remains optimistic about its economic trajectory. The Asian Development Bank projects Cambodia’s GDP growth rate to reach 6.1% in 2025, while the Royal Government of Cambodia anticipates growth as high as 6.3%, driven by strong performance in the industrial, service, and agricultural sectors.

The industrial sector, particularly garment and non-garment manufacturing, is expected to grow by 8.6%, supported by global demand and government initiatives like the Cambodia Footwear and Bag Development Strategy 2022–2027. Meanwhile, the services sector is projected to expand by 5.6%, fueled by tourism, real estate, transport, and digital services.

This robust growth outlook makes Cambodia one of the top three fastest-growing economies in the region, reinforcing its appeal to both regional and global investors.

Sustainability and Green Investment: A National Priority

Cambodia is not just focused on growth—it’s also committed to sustainable development. In October 2021, the government launched the Long-Term Strategy for Carbon Neutrality (LTS4CN), which outlines a roadmap to achieve net-zero emissions by 2050. This strategy emphasizes renewable energy, sustainable agriculture, and green infrastructure, with the potential to create 449,000 new jobs and boost GDP by 2.8% annually by mid-century.

In tandem, the National Circular Economy Strategy and Action Plan, launched in June 2021, aims to reduce waste, promote resource efficiency, and engage the private sector in building a greener economy. These initiatives signal Cambodia’s readiness to attract environmentally conscious investors and align with global ESG (Environmental, Social, and Governance) standards.

The 2021 Law on Investment: A Game-Changer for Investors

One of the most significant developments for investors is the new Law on Investment (LoI), enacted in October 2021. This law replaces the 1994 version and introduces a modern, transparent, and predictable legal framework designed to attract both domestic and foreign investment.

Key Benefits of the New Investment Law:

Tax Incentives: Investors can benefit from income tax exemptions ranging from 3 to 9 years, depending on the sector and project type. Additional deductions are available for R&D, employee training, and green initiatives.
Customs Duty Exemptions: Qualified Investment Projects (QIPs) are exempt from import duties on construction materials, production equipment, and inputs.
Legal Protections: The law guarantees non-discrimination, protection against expropriation, and free transfer of funds, providing a secure environment for capital investment.
Streamlined Procedures: The registration process has been simplified, with a 20-working-day timeline for issuing investment certificates and the option to apply online.

The law also introduces Expanded QIPs (EQIPs) and Guaranteed Investment Projects (GIPs), offering flexibility for businesses looking to scale or restructure.

Strategic Location and Trade Access

Cambodia’s geographic position offers investors access to some of the world’s fastest-growing markets. The country is a member of the Regional Comprehensive Economic Partnership (RCEP) and has signed bilateral free trade agreements with China and South Korea. These agreements provide preferential access to a combined market of over 2 billion consumers, making Cambodia an ideal base for export-oriented businesses.

Additionally, Cambodia benefits from duty-free access to the European Union under the Everything But Arms (EBA) initiative and enjoys Generalized System of Preferences (GSP) status with several other countries.

Infrastructure and Workforce Advantages

Cambodia has made significant strides in improving its infrastructure, particularly in transportation, logistics, and digital connectivity. The government’s Inter-Transport and Logistics Master Plan 2023–2033 aims to enhance road, rail, and port infrastructure, reducing costs and improving supply chain efficiency.

The country also boasts a young and dynamic workforce, with a median age of just 25 years. Labor costs remain competitive compared to neighboring countries, making Cambodia an attractive destination for labor-intensive industries such as manufacturing and assembly.

Challenges to Consider

While Cambodia offers numerous advantages, investors should also be aware of potential challenges:

Land Ownership Restrictions: Foreigners cannot own land outright but can enter into long-term leases or form joint ventures with Cambodian entities.
Regulatory Complexity: Although the new investment law simplifies many processes, navigating local regulations may still require expert guidance.
Infrastructure Gaps: While improving, some rural areas still lack reliable infrastructure and utilities.

Partnering with a local advisory firm or investment facilitator can help mitigate these risks and ensure compliance with Cambodian laws.

Final Thoughts: Is Cambodia Right for You?

Cambodia’s combination of strong economic growth, favorable investment policies, strategic location, and commitment to sustainability makes it a compelling destination for investors across sectors. Whether you’re in manufacturing, real estate, agriculture, or green technology, the Kingdom offers a wealth of opportunities for those willing to engage with its dynamic and evolving market.

Ready to Invest in Cambodia? Let Adaeng Development Be Your Strategic Partner

At Adaeng Development Co., Ltd, we don’t just understand Cambodia’s investment landscape—we help shape it. Whether you’re a foreign investor exploring new opportunities or a local entrepreneur ready to scale, our team is here to guide you from vision to execution.

What We Can Do for You:

Bilateral Trade Advisory: We connect you with trusted producers and streamline cross-border transactions.
Land Acquisition & Holding: We assist with land purchases, conversions, and legal holding structures for foreign clients.
Property Development Services: From feasibility studies to full project proposals, we help you build with confidence.
Regulatory Compliance: We secure all necessary government approvals, licenses, and permits—so you can focus on growth.

Why Choose Adaeng?

Deep-rooted local expertise with a global mindset
Transparent, efficient, and personalized service
Proven success across multimillion-dollar development projects
A trusted network across Cambodia’s public and private sectors

📞 Let’s Talk Business Visit www.adaeng.co or contact us today to schedule a consultation. Whether you’re investing, trading, or developing, Adaeng Development Co., Ltd is your gateway to success in Cambodia.