KITA: Cambodia is a charming investment destination

KITA: Cambodia is a charming investment destination. March. 11, 2019 08:10. by Seok-Jun Bae eulius@donga.com.
President Moon Jae-in has embarked on a tour to Brunei, Malaysia and Cambodia as his first overseas travel for this year, fueling the Korean business community’s interest in investment potential in the three Southeast Asian countries.

The Korea International Trade Association’s International Trade Institute released a report entitled “Export opportunities in Cambodia, a promising emerging market in ASEAN” on Sunday. The institute said Cambodia is a “country of three zeros,” including zero restriction to foreign capital, zero foreign exchange risk and zero import tariffs. The country also comes with “three lows,” namely low wage, low average age of its population and low export tax.

Cambodia imposes virtually zero restrictions on foreign investors. An investor gets permission right after reporting investment plans to authorities, while a foreign firm can hold 100-percent stake in a company there. It is also free of foreign exchange risks due to dollarization that allows for direct substitution of the U.S. dollar for its currency. If an investor wins a project deemed suitable for investment, the investor gets exemption from import tariffs for facilities and raw materials, and corporate tax for up to nine years.

This year’s minimum wage in Cambodia’s garment industry is 182 dollars per month, which is about 60 percent of that in Thailand, whose half population is 25 years or younger, offering abundant young labor. Since the country is entitled to the Generalized System of Preferences (GSP), it enjoys tariffs benefits when exporting to the U.S., the EU and Japan.