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6 Important Resources to begin a Foreign Direct Investment (FDI), Cambodia

If you are foreigners who are looking for investment opportunities in Cambodia under the scheme of Foreign Direct Investment (FDI), you must be ready for the following matters due to the Government of Kingdom of Cambodia requiring you as the mandates to the investors or the applicants have to move first on your endeavor.

Six major resources to have on hands;

  1. Representative Office in Cambodia,
  2. Letter of Intent or Interest (LOI),
  3. POF/BCL,
  4. Property Land,
  5. Local Representative
  6. Your Company Information Sheet (CIS)

Wait, What about you are not entering Cambodia and it is your first attempt so how are you gonna do in response to the requirements made?

Here are the things to practice in accordance to best investment procedure that the Government of Cambodia has in place;

1. Representative Office in Cambodia:

Having an office or setting up a new company in Cambodia to proceed in accordance with the Cambodia Government isn’t an easy job for newcomers in the meantime that you are not sure whether your case is going to get approval. Therefore, we have solutions for your considerations. Adaeng Development (ADAENG) specializes in case arrangements of bilateral trade, property land ownership for foreigners, business advisory, and property development so you or your company can appoint ADAENG as your local presentative company to study on your behalf. ADAENG will work in partnership to accomplish your endeavor and will give you a final confirmation whether your case can get approval.

If you prefer to have a local office and proceed everything by yourself then, here are the things that you might need to make a serious decision on the typical office that you would like to represent you. According to Cambodia law on commerce, you can open or set up an office in Cambodia as your local company, representing office, or branch office. Taxes responsibilities will be depending on your prefered selection. ADAENG does not qualify to advise regarding tax but we have networks to introduce.

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2. Letter of Intent or Interest (LOI):

Cambodia gives equal investment opportunities either to Cambodians or foreigners therefore, you can seek approval from the Government of Cambodia on almost every field except the following areas;

  • Land ownership (although there are options to enjoy control over land, for example, through a land-holding company which can have a mix of foreign and Cambodian ownership, although the foreign ownership cannot exceed 49%).
  • Processing or production of psychotropic substances and narcotic substances.
  • Production of poisonous chemicals, agricultural pesticides or insecticides and other goods using chemical substances prohibited by the World Health Organization.
  • Processing or production of electric power by using waste imported from a foreign country.
  • Forestry exploitation business prohibited by the Forestry Law.

So, you can write your letter of Intent or Interest to do direct foreign investment in Cambodia with your preferable field. Once ADAENG got your contract agreement to appoint us to be your local representative for your investment case, we will work with local authorities and the State Government of Cambodia to see the latest opportunities that are leftovers.

The LOI can be addressed directly either to ADAENG or to the Govt’ parenting ministries therefore, consult with ADAENG prior issuing it. Most investment opportunities that we used to receive are;

  • Mutual (biliteral) trade between Cambodia and destined countries,
  • Piped water supply,
  • Solar farms for generating electricity for sale to the Government of Cambodia (25 years PPA),
  • Waste to Energy,
  • Buying microfinances and banks,
  • Construction sand, reclamation sand and silica,
  • Smart Eco-City Development,
  • Industrial Hubs i4.0,
  • Food Processing Factory,
  • Casinos,
  • Buying existing businesses (MFIs, Banks, Hotels, Logistics, Industrials, etc)
Investment Opportunities 2023 await!

If you are looking for projects that got approval by the Govt of Cambodia already or half-way, browse for more information.

3. POF/BCL (Proof of Fun/Bank Confirmation Letter):

To give you an opportunity for investment in Cambodia is an easy duty but Cambodia Government is strictly in accordance to international law of best practice otherwise, Given Investment permission and license will fly around market as you are going to use them for fishing investment capital which it can smell not good to Cambodia. Therefore, you have to have capital of investment in place prior to talking more regarding investment opportunities, terms and conditions, etc.

Once your application gets approved, you have to have a local bank account with one of Cambodia Commercial banks where you have to place 25% of your investment costs within a 90 days period otherwise, your license and permits can be confiscated back. Anyways, you can submit a letter to seek approval for an extension of a grace period.

4. Property Land:

To get approval for your investment license and permits, your company has to have a land location where the Government of Cambodia can assess and evaluate your investment proposal. Without land in place, the Govt will never give you the chance. Hence, you and your company have to purchase land first.

However, you can submit your investment proposal to the Govt first and then, the Govt will give you a grace period between 45 – 90 days to submit your land property address, landmap and title deeds so you can run as fast as you can to get these ready. However, it will not be easy to do so because it consumes lengthy time up to a year or longer to be ready for land occupation, ownership transfer and land subject conversion etc.

Nonetheless, ADAENG is here to lend the hands we specialize on land purchase, land conversion, and hold the land for foreign companies. We serve since 4 years now.

Hot Notice:

Investors must make sure that any land they intend to develop has been registered with the Ministry of Land Management, Urban Planning and Construction. A land that has not been registered will not be subject to the same legal protections which could result in investors losing control over the land without any legal recourse.

5. Local Representative:

To have a local representative who can talk on behalf of you and your company is a demand due to a way to avoid miscommunication and misunderstanding between your company and the Govt’ of Cambodia. Your local representative can understand the local language and sense meant by local authorities here better than you except you are native Cambodian. Furthermore, he or she can be available upon the time calling here. Therefore, having a representative company or a local mandate is amust.

Last but not least regarding the local representative even though you have already entered Cambodia. You will need to provide a copy of your passport and entry visa attached into your investment case to be submitted to the parenting ministry.

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6. Your Company Profile (CIS):

Lastly, you have to your latest update of your company profile, certificate of corporation, business license and permitts that you have had attaching all mentions above. This is an important document as the Govt responsible party will study your company background, experience, your financial and narrative reports on your existing business. Your company has to have capacity to run similar projects in other countries for more than three years.

If you are looking to invest in a new field that you are not experiencing, the Govt might not agree on your proposal unless you have to attach another qualified EPC that signed a contract with you. Then, the Govt of Cambodia will study the background and experience of your appointed EPC in addition to yours.

All above mentions are for the investor/developer side to ensure it has capacity to handle assigned tasks, if Govt is going to give. However, Govt can consider for immediate response or putting you on waiting list depending on Govt long term development plan which Govt has in place. If your proposal is acceptable, the Govt will then form up a task force together with our end to conduct a feasibility study and several meetings will take place where the first step is.

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