Over the past 10 years, Cambodia has grown into a hotbed for Chinese investors, and the relaxing foreign exchange control is among the main reasons, said Wang Hongsong, assistant to president of Bank of China (Hong Kong) Ltd. Phnom Penh Branch, at the 2019 China–Cambodia Capital Market Cooperation and Matchmaking Seminar held in Qianhai SZ-HK Fund Town yesterday.
Wang said that Cambodia is still a less developed country, while China, on the other hand, has already gone through that stage and has some industrial advantages that can be transferred to Cambodia. At the same time, China and Cambodia have maintained good relations, which also attracts many Chinese investors.
“Another important reason is that there is basically no foreign exchange control in Cambodia. According to the foreign exchange law of the country, all foreign exchange transactions are allowed. The only thing is that you need to process it through licensed financial institutions like us,” said Wang.
“As a young developing country, Cambodia has been able to build itself very rapidly over the last 20 years and has become one of the fastest-growing economies in the world, with an average GDP growth rate of 7 percent in 2018 and a labor force of 6.64 million people,” said Ha Jong Weon, vice chairman and chief operations officer of Cambodia Securities Exchange, while introducing Cambodia’s macro economy.
According to Ha, the Law on Investment of Cambodia provides incentives to both local and foreign investors, especially regarding import duty exemptions and tax on income. The Cambodian Government prioritizes the export sector.
“Foreign entities can own 100 percent of a local business or commercial enterprise,” Ha said, adding that the Cambodian Government does not impose controls on foreign exchange or trade restrictions, and allows the free repatriation of profits and free remittance of interest, loan repayments, dividends and capital.
The local currency, the Khmer Riel, was introduced in 1980. However, the Cambodian economy is partially dollarized, with 80 percent of deposits and credits in the country’s banks in U.S. dollars.
Labor productivity gains have been lower than in other rapidly growing economies, partly due to lower capital accumulation in terms of machinery and durable equipment.