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I. Overview of Cambodia 
Over the past two decades, Cambodia has undergone a significant transition, reaching lower middle-income status in 2015 and aspiring to attain upper middle-income status by 2030. Driven by garment exports and tourism, Cambodia’s economy has sustained an average growth rate of 8% between 1998 and 2018, making it one of the fastest-growing economies in the world. 
The global shock triggered by the COVID-19 pandemic has significantly impacted Cambodia’s economy in 2020 at a time when Cambodia also faces the partial suspension of preferential access to the EU market under the “Everything but Arms” initiative. The outbreak caused sharp deceleration in most of Cambodia’s main engines of growth in the first quarter of 2020, including weakened tourism and construction activity. Growth is projected to slow sharply to 2.5 percent in 2020 under the baseline scenario. The COVID-19 outbreak and slow recovery in global economic activity alongside prolonged financial market turmoil pose risks to Cambodia’s growth outlook.
Since Cambodia became the member of Association of Southeast Asian Nations (ASEAN) and World Trade Organization (WTO), the country developed fast with import and export increasing year by year. According to the Ministry of Commerce of Cambodia, the major export markets of Cambodia are the US, the UK, Germany, Japan and Canada; the import sources are China, Thailand and Vietnam.
II. Market Opportunity
Cambodia offers potential investment opportunities in various sectors including: tourism in both natural and recreational areas; education; construction; household products; agriculture and agribusiness; automotive; energy; retail stores and restaurants; and health care.
Best Prospects
Tourism infrastructure and resorts
Education services
Architecture, construction, and engineering services
Household goods and appliances
Agribusiness and food processing
Used cars and automotive parts
Power generation equipment
Fast food and beverage franchises
Pharmaceuticals, medical Supplies, and medical equipment
Health care services
III. Duties and Taxes
1. Normal Treatment
There are different types of duties and taxes collected by Customs.
No Types of Duties and Taxes Rate
I. Importation  
1 Customs Duties (CD) 0%, 7%, 15%, 35%
2 Special Tax (ST) 0%, 4.35%, 5%, 10%, 15%, 20%, 25%, 30%, 45%, 50%
3 Additional Tax (AT) 0.02$/Liter on Petroleum Oil, 0.04$/Liter on Diesel Fuel
4 Value Added Tax (VAT) 10% flat rate
II. Exportation  
1 Export Tax (ET) 0%, 5%, 10%, 15%, 20%, 50%
2. Preferential Treatment
Treatments Conducted
ASEAN Trade in Goods Agreement (ATIGA) Under preferential treatment, Cambodia shall implement the ASEAN Trade in Goods Agreement (ATIGA) by 2015. In this context, Cambodia has implemented tariff reduction since 2009 and shall eliminate import duties on all products by 2015 with flexibility to 2018 by the following schedule:
  • Import duties, at least 80% of tariff lines, are equal to or less than 5% by 1st January 2009,
  • Import duties on ICT products shall be eliminated by 1st January 2010,
  • Import duties on unprocessed agricultural products in High Sensitive List shall have their respective applied MFN rate,
  • Import duties on priority integration sector (PIS) shall be eliminated to 0% in 2012,
  • Import duties on Priority Integration Sector Negative-List PIS-NL shall be eliminated to 0% in 2015,
  • Import duties on unprocessed agricultural products in Sensitive List shall be reduced or eliminated to zero or five percent (0-5%) by 2017,
  • Cambodia shall maintain 7% of the total tariff lines or 662 tariff lines in 5% until 2018.
ASEAN-China Free Trade Agreement (ACFTA) Normal Track
  • Cambodia at least 50% of tariff lines shall reduce to 0-5% by January 1st 2012.
  • Cambodia shall eliminate its tariffs not later than January 1st 2015 with flexibility to 2018.
Sensitive Track
  • Cambodia shall be subsequently reduced to 500 tariff lines at the HS 6-digit level to 0-5% not later than January 1st 2020.
Highly Sensitive List
  • Cambodia shall keep not more than 40% of the total number of tariff lines in the
  • Sensitive Track or 150 tariff lines at the HS 6-digit level, whichever is lower.
ASEAN-Korea Free Trade Agreement (AKFTA) Normal Track
  • Cambodia shall reduce its tariff rate at least 50% of the tariff lines placed in the Normal Track to 0-5% not later than January 2015 and 90% of tariff lines shall eliminate not later than January 2017, and all tariff lines shall eliminate not later than January 2018 with flexibility to not later than 2020.
Sensitive Track
  • Cambodia shall reduce the applied MFN rates of tariff lines placed in Sensitive Lists to 20% not later than 1 January 2020.  These tariff rates shall be subsequently reduced to 0-5% not later than 1 January 2024.
Highly Sensitive Track
  • Cambodia shall reduce the applied MFN tariff rates of tariff lines placed in Highly Sensitive List not more than 50 % not later than 1 January 2024.
ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEP) Normal Track I
  • The tariffs rates shall reduce to 0% from the Agreement enter into force.
Normal Track II
  • 40% of tariffs lines shall reduce to 5% by 2020 and 90% shall eliminate by 2023, and 100% shall eliminate by 2026.
Highly Sensitive or Category C
  • Cambodia shall place 4% of tariffs lines in Category C
Sensitive Track or Category R
  • Cambodia shall place 8% of tariff lines in Category R.
Exclusion List or Category X
  • Cambodia shall place 3% of tariff line in Exclusion List.
ASEAN – Australia and New Zealand Free Trade Agreement (AANZFTA) Normal Track I and II
  • 88% of tariff lines shall reduce in 2021, and 2024 for normal track II.
Sensitive Track
  • 7% of tariff line shall reduce to 5% in 2025.
Highly Sensitive
  • Cambodia shall place 3.45% of tariff line base on MFN rate
Exclusion List
  • Cambodia shall place 1.50% of tariff line exclude from the schedule.
ASEAN-India Free Trade Agreement (AIFTA) Normal Track 1
  • Tariff rates shall reduce or eliminate from 1st January 2010 to 31 December 2018.
Normal Track 2
  • Tariff rates shall reduce or eliminate from 1st January 2009 to 31 December 2021.
Sensitive List
  • Tariff rates shall reduce or eliminate from 1st January 2009 to 31 December 2021.
Special Products
  • Such as Palm Oil, Coffee, Black Tea, and Pepper
  • The period to reduce is from Jan 01, 2009 to Dec 31, 2018
Highly Sensitive
  • The goods in this category such as rooted orchid cuttings and slips, aquarium plants, Coconut in shelled or shelled etc., shall reduce 50% of Ad valorem.
  • Base rate is 35%. Cambodia has committed to reduce to 25% in 2012, continue to reduce to 22.5% in 2013, 20% in 2014, 17.5% in 2015, 15% in 2016, 10% in 2017, 0% in 2018.
Regional Comprehensive Economic Partnership (RCEP)
  • The Regional Comprehensive Economic Partnership (RCEP) is a FTA negotiation that has been developed among 16 countries: the 10 members of ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Viet Nam) and the six countries with which ASEAN has existing Free Trade Agreements (FTAs) – Australia, China, India, Japan, Korea, and New Zealand. In relation to RCEP these six non-ASEAN countries are known as the ASEAN Free Trade Partners (AFPs).
  • Following a preparatory process, the participating countries began formal negotiations in May 2013.  RCEP will cover trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement/legal and institutional issues and other issues to be identified during the course of negotiations.
IV. Prohibited and Restricted Imports
Cambodia currently prohibits the commercial importation of the following products: narcotics, psychotropic substances and their precursors, toxic waste and poisonous chemicals and substances, and certain pesticides.  Government regulations also prohibit the import of used computers and spare parts, household waste (discarded from dwellings, public buildings, factories, markets, hotels, business buildings, restaurants, transport facilities, recreation sites, etc.), and hazardous waste (for example, PCB waste from discarded air conditioners). To curb the spread of avian influenza, Cambodia created and implemented more stringent quality control and inspection of poultry imports. 
Certain imports are subject to quantitative restrictions, and importers of these products are required to seek approval from relevant government ministries or technical agencies. Import permits or licenses are required from relevant government agencies depending on the nature and type of the imported commodity.  Import licenses are required for firearms and pharmaceuticals. Firearm import licenses can be obtained from the Ministry of Interior, while pharmaceutical licenses can be obtained from the Ministry of Health. Other special requirements apply to imports of food products and pharmaceuticals: food products must have a 50 percent minimum remaining shelf life at the time of inspection, and pharmaceuticals must have a minimum 18 months remaining shelf life at the time of inspection.
V. Notes of doing business
1. Features of Cambodian trade
Cambodian industrial production center on garment industry, thus its export and import trade features that both raw materials production location and the target market are outside the country. In recent years, the foreign-invested garment companies are the major forces of foreign trade growth. The export volume of garment accounted for over 95% of total export volume. Europe and America are the major export target market. ASEAN countries and East Asian countries are the sources of import.
2. Advantages and restrictions of Cambodian trade
The economic integration of ASEAN and construction of free trade area will promote Cambodian economy and foreign trade to a great degree. Cambodia joined ASEAN in 1999, gradually realizing the goal of tariff concession under the Common Effective Preferential Tariff with other members. ASEAN signed China-ASEAN Comprehensive Economic Cooperation Framework Agreement with China in 2002. China-ASEAN Free Trade Area was completed in 2010 and China granted tax reduction and exemption for Early Harvest Plan to Cambodia. Over 400 import goods are granted zero-tariff treatment, most of which are agricultural products, forestry products, husbandry products and fishery products. In addition, the free trade areas of ASEAN with India, ROK, Japan, and Australia and New Zealand are under construction. 28 countries and regions grant Generalized System of Preference to Cambodia, including the US, the UN and Japan.
The single trade structure and concentrating on Europe-America market make Cambodia vulnerable to international economic changes. Even though enjoying preferential treatment, Cambodia faces with gradually equal treatment same as other countries and the challenge of competition. What’s more, owing to the market saturation, it is hard to attract new investment for Cambodian garment industry.
Reference: 1. Chinese Ministry of Commerce Department of Outward Investment and Economic Cooperation
2. World Bank Group
3. official website of the U.S. Embassy in Cambodia
4. General Department of Customs and Excise of Cambodia
5. The International Trade Administration (ITA), U.S. Department of Commerce
2020-10-26 10:26:56