Cambodia

Cambodia is a state in Southeast Asia, located in the south of the Indochina peninsula. In the northwest, there is a visiting card of the country — a huge archaeological park of Angkor Wat, built during the Khmer Empire and including hundreds of ancient temples. It is the largest architectural and religious structure in the world and also a UNESCO World Heritage Site.

General information

The official name of the country is the Kingdom of Cambodia (for some time it was known as Kampuchea). The territory of the country, according to the UN Department of Statistics, is 181,035 km². The population of Cambodia is about 17,425,003 people (as of the beginning of 2023), over 97% are Khmers.

About 96% of the country's population speaks Khmer, which is the only official language of Cambodia. As a second language, as a legacy of colonial times, French is widespread. It is used as the language of education in many schools and universities and, to a very limited extent, by the government of the country. In recent decades, English and Chinese have become the most studied foreign languages. The languages of the national minorities of the country are also widespread.

The traditions and daily life of the vast majority of the population of Cambodia are closely connected with Buddhism. This is the most widespread religion in the kingdom, it is practiced by more than 95% of the population. Theravada Buddhism is the state religion of Cambodia; there are about 4,390 temples of this religion throughout the country. 1.6% of the population of the state are adherents of Islam, 0.2% - Christianity, another 3.2% profess other religions.

Riel is the currency of the state.

The capital of Cambodia is the city of Phnom Penh, it is the largest metropolis and economic center of the country (about 1 million inhabitants). Other major cities are Battambang, Siem Reap, Kampong Saom (formerly Sihanoukville), Prey Veng and Kampong Cham.

The territory of Cambodia is divided into 23 provinces (khet) and 1 city of central subordination (krong).

History, geography, culture, mentality

Cambodia is a state with a rich history that has centuries-old roots. It is believed that the state on the territory of modern Cambodia was formed in the 7th century AD. The Khmer Empire flourished in the 9th century when Jayavarman II declared independence from Java.

During the Middle Ages, the Khmer often fought with their neighbors (Vietnam and Siam claimed the territory of the country).

In the 1860-80s, Cambodia, trying to find protection from Siam, falls under the protectorate of France.

Only in 1953 the country's independence was proclaimed. Until 1975, a bloody civil war was going on in Cambodia, which ended with the victory of the Khmer Rouge, led by Pol Pot. As a result, the state of Kampuchea was formed, which fell in 1979 under the blows of the Vietnamese army. On the territory liberated from the power of Pol Pot, the People's Republic of Kampuchea was created. In 1993, elections were held under the control of the UN, and on September 21, 1993, according to the new Constitution, power in the state again passed to the king.

The Kingdom of Cambodia is located in Southeast Asia, in the south of the Indochina peninsula. The country borders on Vietnam, Thailand and Laos, and is washed by the waters of the Gulf of Thailand. Cambodia also includes islands, the largest of which is Kong (100 km²). Most of the territory is located in the Mekong Valley. The relief of the country is predominantly flat, but there are also mountains here, the highest point is Mount Oral (1813 m). The typical landscape of Cambodia is isolated low hills covered with dense impenetrable forest. On the territory of the Kingdom is the largest lake on the Indochinese Peninsula — Tonle Sap.

Throughout the history of Cambodia, religion has had a huge impact on its development. The unique Khmer culture reflects the religious beliefs of the local population in animism, and also elements of Hinduism and Buddhism have found their place.

At various times, the Khmer culture has also been influenced by Javanese, Chinese and Thai cultures. From the 9th-15th centuries, the powerful empire of Angkor flourished in the northwest of Cambodia, named after its capital of the same name. This Khmer Empire dominated all of Southeast Asia (Laos, Vietnam, Thailand). The religious and political views of India also had an influence and were reflected in the development and formation of the state.

The amazing architectural structures of that time that have survived to this day, namely the largest temple complexes of Angkor Wat and Bayon in the center of Angkor Thom (Siem Reap province), are an excellent clear example and evidence of the power of the empire and the uniqueness of its culture. Already in those days, applied arts, sculpture, music, and dances reached an impressive development. And it was the models of those times that served as models for the subsequent cultural development in modern Cambodia.

The inhabitants of the kingdom are distinguished by calmness, restraint and deep religiosity. Upon reaching the age of 16, young men go to temples and lead the life of monks for several years, comprehending the basics of Buddhism. When communicating with each other, Cambodians never show anger or anger, this is considered a sign of bad taste. Along with verbal gratitude in this country, it is customary to give small gifts. According to the beliefs of the Cambodians, the soul after death moves into animals, so you should not even kill a midge in front of the locals.

Due to the hot and humid climate, the most common form of clothing is casual. At the same time, when visiting government institutions and official events, the recommended dress code is a business suit.

When visiting temples, men are advised to wear trousers and long-sleeved shirts, while women are advised to wear blouses and skirts.

When entering a place of worship that contains an artistic or sculptural image of the Buddha, it is customary to remove hats and shoes.

Before photographing local residents, it is advisable to obtain their permission.

Permission is also required for photographing and filming inside places of worship. Photographing objects belonging to the conduct of the army, police and gendarmerie is strictly prohibited.

It is offensive to the locals to touch their head in any way, including stroking and patting. Tipping is optional, but welcome.

Power

The country is a constitutional monarchy, so the power of the monarch is limited. The King of Cambodia is a symbolic figure to whom people should give love and respect. Since 1993, the King of Cambodia has been elected, making it one of the few elected monarchies in the world. The king is elected for life from among the members of the Norodom and Sisowath dynasties, who are at least 30 years old, by the Royal Council of the throne, consisting of several high-ranking political and religious figures.

The highest legislative body of Cambodia is the Parliament, which consists of two chambers. The supreme body of executive power is the government (Council of Ministers), officially approved by the king. The prime minister (head of government) is the representative of the party or coalition that won the elections to the National Assembly. It is determined by the President of the National Assembly and approved by the King.

Economy

Currently, Cambodia follows an open market system and has experienced rapid economic progress over the past decade. In 2021, Cambodia's GDP was about US$29.8 billion. Per capita income, although growing rapidly, is still low compared to most neighboring countries. The two leading sectors of the Cambodian economy are the textile industry and tourism. More than 350,000 people are employed in the clothing industry, that is, approximately 4% of the total economically active population of the country. The main export partners of the Kingdom of Cambodia are such highly developed countries as the USA, Germany, Canada. In terms of imports, the main partners are the neighboring countries of Thailand, China, and Vietnam. Today, over 270 textile factories operate in the country.

In recent years, the tourism sector has become the most important branch of the state's economy, since over 500,000 people are employed in the tourism sector. Thanks to extensive foreign investment in the resorts of Cambodia, such as Sihanoukville, Siem Reap, Phnom Penh, many comfortable hotels, restaurants, cafes and other tourist infrastructure facilities have been built.

In 2005, recoverable oil and gas fields were discovered in Cambodian waters, which will become another source of influence in the future. Mining is also of great interest to investors, especially in the northeast, and the government sees opportunities to mine bauxite, gold, iron and gems.

The country also has a manufacturing industry, enterprises that are mainly engaged in wood processing, processing of seafood and fish, agricultural raw materials, as well as the production of cement, soap, and cigarettes.

Cambodia currently enjoys trade privileges under the EU's Everything But Arms (EVA) program, which was introduced to help the world's least developed countries. Thanks to them, almost all Cambodian goods are imported duty-free into the EU.

In addition, agricultural activities remain the main source of income for many Cambodians. The service sector is heavily concentrated in trading activities and catering services. Main import items:

• knitted fabrics of machine or hand knitting;
• means of land transport, their parts and accessories;
• mineral fuel, oil and products of their distillation;
• bituminous substances;
• mineral waxes;
• boilers, equipment and mechanical devices, their parts;
• electrical machines and equipment, their parts;
• chemical fibers;
• plastics and products from them;
• cotton;
• paper and cardboard;
• black metals.

Sufficiently high growth rates have been maintained in recent years in the construction industry (annual growth is about 17%). Large residential areas, shopping complexes, modern offices, hotels, banks are being built in cities. Much attention is paid to the development of transport infrastructure.

According to Prime Minister Hun Sen, Cambodia needs about $500 million in loans every year to build new roads and bridges. China and Japan play a significant role here. Thus, traffic begins on the largest bridge in the country (2.2 km) across the Mekong in the province of Kandal on the road leading to Vietnam. Japanese investments for the implementation of this project reach 130 million US dollars. The new bridge is of great importance not only for the two neighboring countries, but also for the implementation of the strategic plan for creating a unified transport system of the ASEAN countries as a whole.

Business climate

The process of opening a company in the kingdom is not at all easy, especially when visiting the country for the first time and in the absence of any contacts. It is necessary to have a good knowledge of local and national rules, statutes, taxation system, ways of doing business, and so on. All the nuances of registering a business in Cambodia are best discussed with local lawyers who will help you register a business with little or no involvement of a foreign entrepreneur.

Foreigners in Cambodia can own 100% of the shares of a company, excluding the real estate of the company. In other words, to open a company in Cambodia, you do not need a local shareholder. If you are interested in starting your own business, you need to obtain an appropriate license from the Ministry of Commerce. To conduct business in Cambodia, in many cases, a private entrepreneur's license is sufficient, its cost is low, and the process of obtaining it is simple and clear. However, large investors in the country may need to register an international company Co., Ltd. (similar to LLC). The process of registering such a company takes about a month on average.

Foreigners successfully open their own business in Cambodia in a variety of areas, but most often we are talking about the restaurant or hotel business. Some are organizing discos, building swimming pools and attractions for tourists. Entrepreneurs who have large funds open their own clinics in Cambodia or organize farms.

Although there are some restrictions for foreigners in the tourism sector in Cambodia (for example, they cannot work as a guide in Angkor), they are minor, and many successfully organize their own travel agencies.

Business in Cambodia can be rented.

As a result, the most serious difficulty in organizing your own business in the country is its promotion and development. According to foreigners who are already doing business in Cambodia, it may take a long time to make their business profitable in this country. The reason for this is a somewhat conservative population, which still prefers to solve all cases with the help of relatives or acquaintances, instead of turning to a foreign firm for a service. Therefore, at least at the initial stage, you will have to rely on foreigners and tourists.

Investment climate

The Government of Cambodia is trying to make every effort to create favorable conditions for foreign investors. Over the past few years, companies from China, Vietnam, Japan, the USA, the EU countries and South Korea have been attracted to the Kingdom. The main focus for increasing investment from abroad is on improving the security of investments and improving the transport infrastructure.

Coordination of cooperation with foreign partners is carried out by the National Development Council, which is a government agency and deals with both practical issues of placing foreign capital in the Kingdom and the development of a specialized contractual framework.

In addition to investment in light industry, there is a growing influx of capital in the real estate sector (representatives of South Korea, Japan, China, Singapore and Malaysia are active in this cluster). Currently, 347 international companies are involved in this area. The partners of the Kingdom show a noticeable interest in the exploration and production of minerals, the development of energy, agriculture, tourism, and the service sector.

Leading positions in Cambodia are occupied by Chinese companies that have begun to invest in the economy of the Kingdom, while other foreign dealers only conducted market research.

Additional complications are introduced by a ban on the transfer of ownership of property to foreign investors in the country, according to local legislation, only the possibility of renting for a period of up to 49 years is provided.

Since 1997, the Intergovernmental Russian-Cambodian Commission for Trade, Economic, Scientific and Technical Cooperation (IPC) has been operating. The Roscongress Foundation and the Cambodian Chamber of Commerce also signed a cooperation agreement.

Business and investment support structures

The Cambodian Chamber of Commerce (CCC) was established in 2005 with a nationwide network and regional and global partnerships. There are currently 18 municipal-provincial chambers of commerce under the CCC. In accordance with Decree No. 16 of February 7, 2017 “On the organization and functioning of the CCC”, it performs the following functions:

• implements economic and trade policy;
• provides economic and investment advice for submission to the government;
• acts as a partner in negotiations with the government;
• establishes a connection with foreign economics and finance;
• controls business and educational institutions;
• cooperates with regional and global chambers of commerce.

In addition, CCC is a dialogue partner of the General Directorate of Customs and Excise, the General Directorate of Taxation and Administration of the Municipality of Phnom Penh under the Customs-Private Sector Partnership (CPPM), the General Directorate of Taxation and Partnership with the Private Sector, and the partnership of the Municipality of Phnom Penh and CCC, respectively.

CCC is the only organization in Cambodia recognized by GS1 International and has been providing barcode services to businesses in Cambodia since 2003.