The government is sending a new draft law on investment to the private sector to discuss ways to make it more comprehensive and help Cambodia become an attractive destination for new investment and to improve the investment environment in the country.
The law is expected to go online this year. It has 11 chapters and 38 articles. The draft law is designed to create a legal framework with openness, transparency and a more favourable situation that can attract more investors to the Kingdom.
The draft law aims to bolster the country’s competitiveness in the sense that the economic infrastructure can be diversified and there can be more resilience to the crisis in the region and across the globe. It also modernises and boosts the productivity of the local industry to link with the regional and global value chains through the movement of capital flows, technological transfers and know-how technology. The new investment law will provide an incentive for transparency, no discrimination, competitiveness and support socio-economic policy. It will also protect the rights and legal benefits of investors in Cambodia.
The law will be implemented for all qualified investment projects (QIP) and their expansion as well as investment projects that are granted.
In article 21 of chapter 5 of the draft law on investment, it is stated the sectors and industries that will receive incentives from the government are high-tech industry, innovation, research and development, new manufacturing that provides added-value and industries that serve the regional and global value chain.
Supportive industries such as agriculture, tourism, manufacturing, electronics, spare-parts, assembling and installation, mechanical and machinery, agro-processing and food processing, tourism, special economic zone development, digital, education and vocational training, logistics, health and green investment will all receive the incentive.
The QIP project will receive an exemption from income tax for three to nine years based on the sector and investment activities after a first profit is disclosed. Those QIP projects will be encouraged to pay the tax reduced by 25 percent for the first two years, 50 percent for the next two years and 75 percent for the last two years. A QIP also receives additional exemption on value-added tax for purchasing raw materials serving local production.
Lim Heng, vice-president of the Cambodia Chamber of Commerce, said the law is good because it will attract more investment. Heng said the law is what the private sector wants because the old one is out of date. Therefore, we need a new law to support trade and investment in the new digital era.
Penn Sovicheat, spokesperson for the Ministry of Commerce, said this law has been amended by the Council for the Development of Cambodia, including the draft law on special economic zones. However, he said the main purpose of these two laws is to improve the investment climate in Cambodia to attract more investors to the country by creating new opportunities and facilitating soft and hard infrastructure, responding to opportunities gained from the outcome of agreements it is negotiating or ready to negotiate with other countries.
This article was first published in Khmer Times. All contents and images are copyright to their respective owners and sources.