Notable challenges for Canadian infrastructure companies in Cambodia:
- Insufficient regulatory frameworks, resulting in continued use of "ad hoc mechanism" in carrying out P3 projects
- Limited human and institutional capacity of relevant stakeholders in the management of P3 projects in initiating, developing, negotiating and managing the P3 projects
- Limited resources to provide for P3 projects that may depend on grants and concessional loans from development partners
- A lack of transparency in some government approval processes, and preferential treatment given to companies from certain countries, namely China
Cambodian business landscape:
Cambodia has been shifting from an agriculture-based economy towards an industrial and service-based economy. Cambodia is facing a serious infrastructure gap and would benefit from greater connectivity and investments in rural and urban infrastructure. To encourage the private sector to join government efforts to diversify its economic base and sustainable growth, a Law on Public-Private Partnerships has been adopted with details of qualified projects dealing with the development of public infrastructures and public services in strategic sectors namely transportation, digital and telecommunication, energy, environment, social affairs, science, and agriculture. Even though the infrastructure market is dominated by China, many pipeline P3 projects such as Sky trains, monorail, subway, railways, waste management, healthcare, etc., could be of interest for Canadian companies.
Summary
With the GDP of USD $28.54 billion in 2022, Cambodia has experienced significant economic growth in the last decade, as one of the fastest-growing economies in the region, with averaged an annual 7.1% GDP growth rate between 1994 and 2021 and is forecasted to reach 5.8% in 2023, largely driven by the manufacturing, agriculture, tourism and construction sectors. The country achieved lower middle-income status in 2015 and the government's goal is to make Cambodia an upper middle-income country by 2030 and a high-income one by 2050. The government has made it a priority to attract investment from abroad. Foreign direct investment (FDI) incentives available to investors include 100 percent foreign ownership of companies, corporate tax holidays of up to eight years, a 20 percent corporate tax rate after the incentive period ends, duty-free import of capital goods, and no restrictions on capital repatriation.
For more information on Infrastructure in the Cambodia market please contact BUNLENG MEN, (Bunleng.Men@International.gc.ca), Trade Commissioner for all sectors, in Cambodia.
