Business opportunities
The Opportunities Online website may be a useful addition to your information sources. The database established by Austrade aims to deliver international sales leads ('export opportunities'), including tenders, generated by our overseas network to Australian businesses.
Registering is simple and once this is done you will have the option of accessing a weekly newsletter featuring the most recent opportunities uploaded onto the system in industry sectors of interest to you. Another feature is the ability to view, and also print, the complete page of opportunity details.
For general inquiries concerning Austrade’s services, please contact Austrade Direct on 13 28 78.
Business etiquette
Business hours in Cambodia:
- Office hours are usually from 8.00am-12.00 noon and 2.00pm-5.00pm, Monday to Saturday with a lunch-time siesta in between.
- Bank hours vary, but are generally open from 8.30am-3.30pm, Monday to Friday.
- Government offices are open from 8.00am-5.00pm, Monday to Friday.
Business practices:
- Many of these are shared in other parts of Asia, with Thai business practice bearing perhaps the closest resemblance.
- Cambodians traditionally greet each other by pressing their palms together in front of their bodies and bowing, called a 'sompeah'. Generally a younger or lower rank person initiates the greeting. This custom has been partially replaced by the Western practice of shaking hands. It is considered acceptable for foreigners to shake hands with Cambodians of both sexes.
- The head is regarded as the highest part of the body, both literally and figuratively. As a result Cambodians don’t approve of touching anyone there, even in a friendly gesture.
- If possible, a business card in both English and Khmer on the reverse side should be presented during the initial greeting.
- While English is becoming more widely spoken, foreigners should try to ascertain whether their partner is fluent in English and, if not, utilise an interpreter to ensure a smooth meeting and follow-up. Cambodian businessmen can be addressed with 'Mr' and their first name, or for women, 'Madam'. Many senior managers of Cambodian companies or high level officials also have the title 'Your Excellency'.
- In Cambodia, social engagements such as eating or playing golf, are useful to create a level of mutual trust and understanding between business partners. Foreign businesses who have been successful in the Cambodia have taken considerable time to build the necessary business and government contacts to operate successfully.
- Face-to-face contact is very important in initial dealings with Cambodians and a capacity to understand (often) very different set of viewpoints. It is important not to become angry, abusive or frustrated with Khmers. Voicing one’s anger is unlikely to achieve much, particularly if a Khmer is forced to 'lose face' in front of his or her colleagues.
- It is very important to determine at the outset in any business dealings the hierarchy and seniority of whom you are dealing with, and those responsible for decision-making. Correspondence and communications should be addressed to the senior decision-makers. Bear in mind that decisions often take a considerable length of time as they are relayed up and down the chain of hierarchy due to the lack of delegation within companies or government ministries.
- Foreigners should take care to avoid a confrontational or aggressive style in their business meetings. Cambodians are generally not direct or forthright in their dealings and take to subtle, rather than blunt, messages. Cambodians will often say yes to direct questions, but this may only mean that they hear and understand you, but nothing more.
- A small token of gratitude in the form of a gift is always appreciated when visiting a Cambodian. Gifts should always be offered with the right hand. If wanting to be particularly polite, foreigners should support their right elbow with the fingers of their left hand. Before entering a Cambodian home, shoes should always be removed.
- While the Khmer language is not easy, Cambodians will sincerely appreciate any efforts to learn their language. Basic greetings or several words in Khmer, even if mispronounced, will act as a good icebreaker in business dealings and show that you are keen to understand an integral part of Cambodian culture.
- It is considered rude to point with your feet, particularly the soles of your feet, towards a person or object, use your hand instead. Try to avoid doing so when sitting opposite anyone. Tuck your feet away under your body when sitting on the floor or on a chair.
- For men, lightweight suits, including one dark suit and tie for official occasions, are appropriate as formal business attire. Light coloured suits are also acceptable. Trousers and an open-neck shirt are acceptable office wear on most occasions. For women, most styles of Western dress are acceptable in Cambodia, but very short dresses and skirts and brief tops should be avoided. Cotton is the most appropriate fabric because of the heat.
Please also note: Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.
Tariffs and regulations
Import restrictions
There are no quantitative restrictions on imports into Cambodia. There are import prohibitions on narcotic drugs and poisonous chemicals.
Most imported goods may enter Cambodia without an import license. Import licensing requirements cover only a small number of products, as specified in the Ministry of Commerce Announcement No.2211 and as described below:
- Weapons, explosives and ammunitions (permit required from the Ministry of National Defence).
- Vehicles and machinery for military purposes (permit required from the Ministry of National Defence).
- Gold, silver, precious stones and articles thereof (permit required from the National Bank of Cambodia).
- Pharmaceuticals and medical material (permit required from the Ministry of Health).
Tariffs
Tariff duties on goods are levied on numerous import items and consist of only ad valorem duties. Imported goods are assessed at their customs value including insurance, freight, customs duties and specific tax. Imported goods are subject to Cambodia’s VAT of 10 per cent.
Cambodia follows the harmonised system of tariff, classified into eight digits. While on paper there are currently 12 import tariff bands, duties have been simplified generally to a four band system, with rates ranging from zero to 120 per cent.
Tariff duties are imposed on the following items:
- Raw materials such as cement, iron, tile and brick, and items considered essential to daily life, including meats and fruits - 7 per cent.
- Equipment and machinery - 15 per cent.
- Finished products such as television, radios and house furnishings - 35 per cent.
- Luxury goods, including automobiles, wine, cigarettes and cosmetics - 70 per cent.
Imports which are exempt from tariffs include imports:
- By diplomatic missions
- For humanitarian or religious purposes
- That provide incentives in accordance with the 1994 Law on Investment
- Of commercial samples
Of various ad hoc exemptions, as decided by the Prime Minister,
Cambodia is not yet a member of the WTO, although it has stated its intention to accede. Cambodia has been a member of ASEAN since April 1999, and has commenced reducing tariffs on ASEAN products according to its obligations under AFTA.
The Ministry of Economy and Finance abolished the system of customs valuation based on an indicative price list in September 1993. The decision stipulates that customs value will be based on CIF market values, and will be expressed in riels. Insurance must be purchased in Cambodia if a consignment has no insurance policy from abroad.
All goods on which the customs duty is more than US$300 must have their customs value approved by the Valuation Office at the Department of Customs and Excise Headquarters in Phnom Penh. Seven major border checkpoints are empowered to approve customs values for goods with a customs duty of US$300 or less. There is a fee of approximately US$4 for this service.
Cambodia operates a Pre-Shipment Inspection Scheme (PIS), which requires the inspection company, SGS, to determine whether the invoice price (transaction value) corresponds to the open market price of the goods. Exemptions for pre-shipment inspection would be shipments with a FOB value of less than US$4000. Under the scheme, importers will have to pay the intervention fee for the PIS service prior to application for inspection. For more details, the SGS Liaison Office can be contacted on +855 15 919 121.
Packing, marking and labelling
Goods should be carefully packaged to protect against adverse weather conditions, particularly heat and humidity. There is no cold storage in Cambodia.
Camcontrol, a unit of the Ministry of Commerce is responsible for setting standards. The Ministry of Commerce requires foodstuffs to have a label including the following information:
- Name of goods
- Producer name and address
- Source
- Quantity
- Batch number and production date
- Expiration date
- In€gredients
- Directions for use (if necessary)
- License of authorising institution (if required for local products)
Weights and measures
The metric system.
Methods of quoting and payment
Quotes are usually on a CIF basis in US dollars. Initial transactions should be by confirmed, irrevocable letter of credit.
Public health requirements
Imported live animals, plants and foodstuffs of plant origin should meet the following requirements:
For live animals, various vaccinations (depending on the kind of animal) are required. The Ministry of Agriculture (Department of Production and Animal Husbandry) is in charge of vaccination controls.
For plants and foodstuffs of plant origin, a phytosanitary certificate is required. The Ministry of Agriculture (Plant Protection and Phtyosanitary Inspection) ensures phytosanitary controls at the border and issues phytosanitary certificates upon request from importers or exporters. The Inspection maintains the list of pests and plant diseases subject to plant quarantine in Cambodia. Cambodia recognises phytosanitary certificates of other countries.
Documentation
Particulars required in the cargo manifest are as follows:
- Bill of lading number
- Port of loading and unloading
- Consignee and consignor
- Description and gross weight of goods
- Quantity, marks, numbers and type of packages
Imported goods require an import declaration form. Goods shipped through Vietnam via the Mekong River must also have a transit licence.
Very small quantities of trade samples can be brought into Cambodia tax-free. A letter to the Director of the Customs Department seeking an import tax exemption and with supporting reasons should be sent prior to importation. Larger quantities of trade samples are subject to payment of import tax.
Taxation
Foreign investors and investments will generally be affected by the following taxes:
A Value Added Tax (VAT) of 10 per cent was introduced in Cambodia in January 1999. The VAT is applied to the 'taxable value' of the goods or services and applies to all stages of production. Corporations, importers, exporters and investment enterprises are required to register for VAT when starting up their business.
Taxpayers will be required to file VAT returns and make VAT declarations and payments on a monthly basis, ie. By the 20th day of the succeeding month. For imports, VAT will be payable to customs at the time of import.
Several categories of imported goods are subject to excise taxes (10 per cent to 30 per cent). Those include:
- some types of cars
- car spare parts
- buses
- trucks
- motorcycles
- beverages
- cigarettes
- gasoline
- oil
The standard rate of profit tax for companies is 20 per cent. Oil and gas and a number of mineral exploitation activities are subject to a 30 per cent rate. At present, a preferential rate of nine per cent is available for investments which meet certain criteria required by the Council for the Development of Cambodia (CDC). The CDC might also grant tax holidays to certain projects for up to eight years depending on their satisfaction of these criteria. Profit tax returns are to be filed annually within three months of the end of the calendar year. In addition, a tax on profit prepayment equal to one per cent of turnover, is required to be paid on a monthly basis by the 15th day of the succeeding month.
The minimum tax is equivalent to a tax floor or minimum threshold which real regime taxpayers are required to pay. Its effect is that Cambodian taxpayers are liable to pay one per cent of annual revenue as tax to the government. Minimum tax is separate and distinct from the profit tax and is due whether or not the taxpayer has made a profit or loss. In the event that a taxpayer’s profit tax liability is greater than the minimum tax, then the minimum tax will be credited against the total profit tax liability of the taxpayer.
A flat rate of 15 per cent withholding tax applies to payment of 'Cambodia source income' to non-residents, whether overseas or within Cambodia. The rate of 15 per cent must be withheld from payments of income, such as income received from services provided in Cambodia, interest on debt obligations issued by a resident or by the government, dividends received from a resident enterprise, capital gains on property sale, rents paid on property in Cambodia, and insurance premiums.
Withholding taxes also arise from local transactions between residents, including a 15 per cent tax on payment made to individuals for services such as consulting and management fees, 15 per cent on royalties for oil, gas and minerals, 10 per cent on rental payments and 5 per cent on interest paid by local banks to resident individuals with a non-fixed term account.
A two per cent turnover tax applies to those tax-payers not within the real regime (large and/or incorporated) taxpayers. Turnover includes revenue from the supply of goods and services. Taxpayers must make monthly turnover declarations and payments.
Resident and non-resident individuals who derive assessable income from sources in Cambodia, irrespective of the place of payment, are subject to personal income tax at progressive tax rates ranging from five per cent to 20 per cent of net assessable income. For non-residents, only the Cambodian sourced salary will be subject to the salary tax. Cash salary includes remuneration, wages, bonuses, overtime, compensations and employer provided loans and advances.
There are a range of other minor taxes which might affect foreign businesses, including house and land rent tax, patent tax, fiscal stamp tax (eg. advertising postings and signages), unused land tax, and specific taxes on certain merchandise and services. To date, Cambodia has not negotiated any double taxation agreements.
Investors in Cambodia are required to prepare annual income statements and balance sheets primarily to assess profit tax liability. Accounts must be received by the Tax Department within three months after the end of the calendar year, ie. 31 March. Current law stipulates that all accounting books and records must be denominated in riel, although in practice it appears that financial statements denominated in US dollars are also acceptable.
Business travel
At present there are domestic flights from Phnom Penh to seven airports in the major provincial capitals: Siem Reap, Battambang, Stung Treng, Rattanakiri, Mondulkiri, Koh Kong and Sihanoukville. Air travel to Siem Reap to view the Angkor Temple complex by air is recommended over other transport options, although travel by boat is possible. The three domestic airlines are Royal Air Cambodge, President Airlines and Phnom Penh Airways. Passengers should check in half an hour before flights.
There are two international airports in Cambodia, Pochentong Airport (Phnom Penh) and Siem Reap Airport (to access Angkor Wat). There are direct flights to Phnom Penh from Bangkok, Ho Chi Minh City, Guangzhou (two per week), Hong Kong, Kuala Lumpur, Singapore and Vientiane. Airlines operating into Phnom Penh are:
- Thai Airways International
- Royal Air Cambodge
- Lao Aviation
- Vietnam Airlines
- Dragonair
- Malaysian Airlines
- Silk Air
There are also direct flights to Siem Reap from Bangkok, Phuket and Ho Chi Minh City. Remember to keep US$20 for departure tax which is payable for all flights on departure from Cambodia.
At Pochentong Airport, there are only limited facilities, including a money exchange counter (offering the same rates as those in the city), a hotel reservation desk, a cafeteria, and several shops. There is a counter outside the entrance to Pochentong Airport where you can hire a taxi at the fixed rate of US$7 into town. Pochentong International Airport is located 12 kilometres from the city, a 20-30 minute drive into town in normal traffic.
Taxis can be booked by phone and are increasingly reliable. They are also available at the larger hotels. Meters are usually not used and drivers prefer a fixed rate around town of around US$4 per trip. For longer trips out of town, however, taxis can be rented for a full or half day for more negotiable rates.
There is no public transport system operating in Phnom Penh. The main mode of transport for the local population and some expatriates is by man-powered 'cyclo' taxis or by motorbike taxis. Prices are usually negotiated in advance, but would be around 2000 riels for a 10-minute journey. For security and safety reasons you should not use cyclos and motorbikes at night. Accidents are frequent and personal injury rates quite high.
Travelling by train, bus, taxi, boat, helicopter and aircraft outside of Phnom Penh have varying degrees of risk attached. The train services from Phnom Penh to Battambang and to Kampot have in the past been attacked by bandits.
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