Investment Environment and Opportunities in Cambodia Presented by Senator Chhit Kim Yeat Vice Chairman of Standing Committee of Foreign Affairs, International Cooperation, Media and Information
I. Investment Environment in Cambodia 2
1. Key Indicators GDP Growth (2004-2015) 16% 14% 12% 10% 8% 6% 4% 2% 0% 14.5% 13.3% 10.8% 11.0% 10.0% 10.2% 9.3% 9.6% 8.7% 9.0% 8.1% 7.5% 7.1% 7.1% 7.3% 7.4% 6.7% 7.0% 7.0% 5.9% 5.0% 4.3% 3.8% 3.1% 2.6% 1.6% 0.1% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e 2015p Agriculture Industry Service GDP Growth Population & Labor Force Population: 15 Million Literacy: 92.7% (15-24 years old) Young and dynamic labor force: Median age 24 years old Population growth rate : 1.54% Low & Manageable Inflation Lao PDR Land area : 181,035 sq.km. 1500 1000 500 0 GDP Per Capita (2004-2015) USD 1225 402 468 534 623 738 731 830 909 990 1043 1130 4 5 6 7 8 9 10 11 12 13 14e 15p Stable Exchange Rate (USD-Riel) 4100 4050 4076 4034 4025 4050 4050 4000 3950 2011 2012 2013 2014e 2015p 3
2. -CDC OPEN DOOR POLICY ONE STOP SERVICE Aftercare Service Customer Approach Pro Business Government 4
5. Investment Incentives Corporate Tax: 20% Tax holidays: 6 years ~ 9 years Or Special Depreciation (Reinvestment of Earning) Full Import Duty Exemption 5
6. Investment Guarantee (1/2) Investment Law provides full guarantee No discrimination No nationalization No requirements of local equity participation No price controls on products or services No restriction on foreign exchanges No capital control 6
6. Investment Guarantee (2/2) Bilateral agreement on the promotion and protection of investments between the Kingdom of Cambodia and other countries (24) Germany Czech Belarus Netherland OPEC Austria N. Korea United States France Croatia China S. Korea Cuba Switzerland Vietnam Japan Laos 1. Australia 2. Austria 3. China 4. Croatia 5. Cuba 6. Czech 7. France 8. Germany 9. Japan 10. Kuwait 11. Lao PDR 12. Malaysia 13. Netherlands 14. N. Korea 15. OPEC 16. Pakistan 17. Philippine 18. ROK 19. Singapore 20. Switzerland Kuwait 21. Thailand 22. USA (OPIC) 23. Vietnam 24. Belarus Pakistan Thailand Cambodia Philippines Australia Malaysia Singapore 7
7. Committed Investments in Cambodia (by sector) Investments by sector (2011-2015) Tourism 10% Agriculture 15% 3,500.0 3,000.0 Infastructure 41% Industries 34% 2,500.0 Investment Capital (2011-2015 Oct) Total of USD 20.94 billion Million USD 2,000.0 1,500.0 1,000.0 500.0 0.0 2011 2012 2013 2014 2015 (~Oct) Agriculture 794.5 556.6 1,128.8 264.7 455.4 Industries 1,340.8 1,489.7 1,106.7 2,835.6 723.3 Infastructure 2,782.3 227.8 2,620.8 353.5 3,129.8 Tourism 845.6 691.5 106.0 479.6 111.9 Total 5,763.2 2,965.6 4,962.3 3,933.4 4,420.4 8
7. Committed Investments in Cambodia (by country) Year 2011 2012 2013 2014 2015 (~Oct) Total $5.7 Billion $2.9 Billion $4.9 Billion $3.9 Billion $4.4 Billion Rank Country % Country % Country % Country % Country % 1 Cambodia 41.24 Cambodia 42.08 Cambodia 66.80 Cambodia 64.00 Cambodia 70.72 2 China 30.55 China 20.69 China 15.68 China 24.44 China 17.44 3 Vietnam 11.99 Korea 9.89 Vietnam 6.10 Malaysia 2.18 U.K 3.16 4 U.K 4.30 Japan 9.15 Thailand 4.37 Japan 1.72 Vietnam 2.02 5 Malaysia 4.20 Malaysia 6.04 Korea 1.76 Korea 1.66 Malaysia 1.69 6 Korea 2.91 Thailand 4.53 Japan 1.59 Vietnam 1.26 Singapore 1.69 7 U.S.A 2.47 Vietnam 2.89 Malaysia 1.04 UK 1.13 Japan 1.26 8 Japan 1.15 Singapore 2.59 Singapore 1.03 Singapore 0.89 Thailand 1.13 9 Australia 0.43 U.K 0.51 UK 0.43 Thailand 0.88 Korea 0.22 10 Singapore 0.28 U.S.A 0.42 France 0.27 Australia 0.51 Canada 0.20 11 Others 0.48 Others 1.21 Others 0.94 Other 1.36 Other 0.48 9
II. Investment Opportunities in Cambodia 10
1. Agro-business 1) Production, Processing and Commercialization of: Rice, Corn, Cassava, Sugarcane, Rubber, Cashew nut, Pepper and others 2) Livestock Farming and Aquaculture Animal breeding Animal feed production Freshwater and marine aquaculture Processing and trading Type Cultivated Area (2013) Yield (2013) Cult. Area (2018) Yield (2018) Rubber 328,771 ha (P. estate17%, ECL 41%, smallholder 42%) (Mature: 78,493ha) 85,244 tons >420,000 ha 400,000 tons Paddy 3,052,420 ha 9,389,961 tons 3,34 million ha 10,85 million tons Cassava 377,239 ha 7,933,381 tons N/A N/A Corn 180,327 ha 848,450 tons N/A N/A 11
2. Tourism (1/4) World Heritage Monuments Angkor Wat Temple World Heritage Site - 1992 Open Sky Policy to Siem Reap Natural beauty - Beach - Islands Ability to attract add-on trips Mekong Dolphins in Kartie Province Song Saa Private Island 12
2. Tourism (2/4) Million Number of Visitor Arrivals (2008-2014) 5.0 4.5 4.2 4.5 4.0 3.5 3.6 3.0 2.5 2.0 2.1 2.2 2.5 2.9 1.5 1.0 0.5-2008 2009 2010 2011 2012 2013 2014 Vision 2020: Visitor arrival from 2013 2020 YEAR 2013 2014 2015 2020 Visitor Arrivals (million) 4.2 4.5 5.1 7.0 13
2. Tourism (3/4) Top ten markets arrivals in 2014 1,000,000 900,000 800,000 700,000 Number of Arrivals 600,000 500,000 400,000 300,000 200,000 100,000 - (100,000) Vietnam China (PRC) Lao PDR Korea (ROK) Thailand Japan U.S.A Malaysia France Australia 2014 905,801 560,335 460,191 424,424 279,457 215,788 191,366 144,437 141,052 134,167 2013 854,104 463,123 414,531 435,009 221,259 206,932 184,964 130,704 131,486 132,028 share (%) 20.1% 12.4% 10.2% 9.4% 6.2% 4.8% 4.2% 3.2% 3.1% 3.0% change (%) 6.1% 21.0% 11.0% -2.4% 26.3% 4.3% 3.5% 10.5% 7.3% 1.6% Source: Ministry of Tourism 14
3. Labor Intensive Industries, processing and manufacturing Competitive labor cost Tax incentives Market access ASEAN Economic Community 2015 15
4. MFN/GSP Market Access Australia Austria Belarus Belgium Bulgaria Canada China Czech Republic Denmark Finland France Germany Hungary Ireland Italy N-Korea Luxemburg Japan Netherlands New Zealand Norway Poland Portugal ROK Russian Federation Slovakia Spain Sweden Switzerland UK USA EBA (everything but arms initiative for LDCs) and the ASEAN integration System Of Preferences (AISP) from the ASEAN 6 16
5. Cambodia Special Economic Zones 17
1. Reasons to invest in Cambodia Open economy Equal treatment of all investors No requirement of local equity participation No price controls on products or services No restriction on foreign currencies convertibility Sound macroeconomic environment 6 th fastest growing economy in the world during the last two decades (average growth rate: 7.7%) Low & manageable inflation rate (under 5%) Stable exchange rate (USD 1 = 4000 ± 5%) Competitive investment incentives Tax holiday: 0% up to 9 years Low corporate tax: 20% Full import duty exemption (production equipment, contraction material, production inputs, machineries) One stop service Information & Application Fast-Track Investment Approval Process: all documents will be processed within only 28 working days. Customs Duty & Tax Exemption Visa & Work Permit Competitive labor force Reasonable wage: (minimum wage in 2015: 128 USD) Young and dynamic labor Force (median age 24 years old) Strategic location Center of ASEAN: flight time average only 1:30 hour to other ASEAN countries Preferential trading status Cambodia obtains EBA from EU Regional Comprehensive Economic Partnership (RCEP): ASEAN + China, Japan, Korea, India, Australia & New Zealand Market access ASEAN Market (AEC): pop. 616 M, GDP $2.5 Tri. ASEAN + China, Japan, Korea, India, Australia & New Zealand (RCEP): pop. 3.3 B, GDP $17.1 Tri. MFN/GSP 32countries & EU (EBA) Market Access The world market (WTO) EU (EBA) 18
2. Strategic Location Myanmar Yangon 2h:00 on average Thailand Bangkok Hanoi Laos o Vientiane. Kunming CAMBODIA Phnom Penh Kuala Lumpur Vietnam Malaysia Singapore Southern China Manila The Philippines Brunei Begawan Jakarta Indonesia 19
Rice Farming & Swiftlet Farming Project In Cambodia
Rice Farming in Cambodia
Land Use For Rice Paddy Farming
Proposed Paddy Farming Location Kampung Thum
Proposed Rice Farming Project Area : Kampung Thum, Cambodia. Proposed land size: 1,000 hectare Land price per hectare (free hold) : US$5,700 Total land investment : USD$5,700,000
Projected Profit & Loss for Rice Farming TWO CROPS PER YEAR A- FARMING AND PRODUCTION RICE FARMING IN CAMBODIA as at 01/01/2015 PARAMETER TOTAL YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 Capital Outlay (USD) Annual Planting (effective hectares) 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Total planted and Matured Hectarage 1,000 1,000 1,000 1,000 1,000 1,000 USD/ha MAKING DAM TO KEEP WATER (US$/ha) 500 500,000 0 0 0 0 0 PLOUGHING (US$/Ha) 120 120,000 120,000 120,000 120,000 120,000 120,000 PLANTING (US$/ha) 100 100,000 100,000 100,000 100,000 100,000 100,000 SEEDLING (US$/Ha) 100 100,000 100,000 100,000 100,000 100,000 100,000 IRRIGATION (US$/ha) 60 60,000 60,000 60,000 60,000 60,000 60,000 Total capital expenditure (US$) 880,000 380,000 380,000 380,000 380,000 380,000 Operating Expenditure (US$) Harvesting & Collection (US$/ha) 160 160,000 160,000 160,000 160,000 160,000 160,000 General expenditures (US$/ha) 100 70,000 70,000 70,000 70,000 70,000 70,000 Total Operating Expenditure (US$) 230,000 230,000 230,000 230,000 230,000 230,000 Total Expenditure (US$) 1,110,000 610,000 610,000 610,000 610,000 610,000 INCOME (US$) YIELD per hectare (minimum Mt/ha) 10 PADDY PRODUCTION OF 1000 HECTARE (Mt) 10,000 10,000 10,000 10,000 10,000 10,000 PRICE OF PADDY (US$/Mt) 180 TOTAL INCOME (US$) 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 YEARLY PROFIT (US$) 690,000 1,190,000 1,190,000 1,190,000 1,190,000 1,190,000
Proposed Swiftlet Farming Project to combine with Rice Farming To build one swiftlet house on 1 hectare of rice field land. Objective to increase source of income on land per hectare basis. Swiftlet farming produce valuable edible birdnest product. Each kilogram of unprocessed birdnest can be sold about USD550 or higher per kilo. The initial investment: One swiftlet house 8mx24mx4 storeys. Using special domestication technology to ensure safer and faster return on investment.
Domestication Technique
Swiftlet House located at Paddy Rice Field
Swiftlet House
Edible Bird Nest (EBN)
Forecasted Profit & Loss for Swiftlet Farming Project summary Total land size (sqm) 11,000,000 Number of house(s) 1,000 Building footprint 8x 24 (sqm) 192 Floors 4 Building construction area (sqm) 192 Building build up area sqm 768 Sales Per Unit House US$ 350,000 VND USD Profit % Per Hse Sales Project Cambodia Phnom Penh Sales - 350,000,000 350,000 Project Cambodia Phnom Penh Cost - 154,707,696 154,708 Gross Profit - 195,292,304 56% 195,292 Each swiftlet houses can be divided into 35 interest share unit for period of 30 years. Each interest share unit can be sold at USD10,000 per ISU Gross Profit will be approximately USD$195 million
Swiftlet Farming Harvesting Projection Per Swiftlet House Per Year Harvest Per Month Harvest Per Year Price Per Kg Total Revenue End Year Bird Nest Harvesting Per House (KG) Per House (KG) Unprocessed US$ Per Building US$ 1 No Harvest 0.21 2.50 550 1,375 2 2nd Year Farming 1.19 14.25 550 7,838 3 3rd Year farming 4.39 52.73 600 31,638 4 4th Year farming 27.09 325.13 600 195,078 5 5th Year Farming 47.92 575.00 650 373,750 6 6th Year Farming 47.92 575.00 700 402,500 7 7th Year Farming 47.92 575.00 700 402,500 8 8th Year Farming 47.92 575.00 750 431,250 9 9th Year Farming 47.92 575.00 750 431,250 10 10th Year farming 47.92 575.00 800 460,000 2,737,179
Combine Revenue & Investment Cost A.Paddy Farming Agriculture land 1000 hectare : US$5,700,000 Paddy Plantation Avg. Cost Every year starting from Year 2 from USD$650,000. Paddy farming average profit starting from Year 2 will be USD$1,190,000 per year. B.Swiftlet Farming (Based on ISU USD350,000 per house) 1 swiftlet house profit per house is USD$195,292 1000 swiftlet houses profit will be US$195 million
THE END THANK YOU
Thank You For more information, please contact Senator Chhit KimYeat Email: kimchhit@hotmail.com Phones: (855)11822877 or (855)16822877 37