While Cambodia is an appealing site for international investment, foreigners who want to start or expand a business in Cambodia face significant hurdles. We’ve compiled a list of five issues you can face in Cambodia so you can be prepared and informed of the problems. In this article, I will indicate four challenges of starting a business in Cambodia.

1. Securing visas to work in Cambodia legally

A visa must be obtained before a foreigner can enter Cambodia. Depending on the type of visa you need, you can apply for it on arrival, at an embassy, or online. The tourist visa, ordinary visa, Khmer visa, official visa, and courtesy visa are the five categories of visas available in Cambodia.

If you want to operate legally in Cambodia, you must first obtain a regular visa and then apply for an EB business visa extension. The visa can be extended for one month, three months, six months, or a year indefinitely. However, just because a foreigner has obtained this visa does not mean they will be permitted to work in Cambodia; a work permit and foreign employment card must also be obtained.

A proper work permit is required for all foreigners, whether they are business owners or employees. The Ministry of Labor and Vocational Training issues the work permit, which is valid for one year. It is, however, only valid until the end of the year in which it was issued. Between the 1st of January and the 31st of March, work permits must be renewed. Late renewals incur penalties that begin on April 1st.

2. Low Growth Competitiveness Index ranking

Cambodia was ranked 106th out of 141 economies in the World Economic Forum’s 2019 Growth Competitiveness Index (GCI). The GCI is used to measure competitiveness at both the microeconomic and macroeconomic levels, and it serves as a guide on subjects that are important for long-term growth. The index also shows the economy of Cambodia’s strengths and weaknesses. Cambodia’s labor market, which ranks 65th out of 141 countries, and ICT adoption, which ranks 71st, are its strengths, while business dynamism, which ranks 127th, is its weakness.

3. Difficult to do business

Cambodia is placed 144th out of 190 economies in the Doing Business rankings. Cambodia is ranked 187th out of 190 nations for starting a business. Cambodia increased the expenses of business registration with the Ministry of Labour and Vocational Training, making it more expensive to start a firm.

However, a site was recently launched to help with the difficulties of starting a firm. CamDX is the new IT business registration platform (also known as Single Portal) which makes company registration easier if the business is required to register at ministries/institutions.

4. Violation of tax provisions and additional tax

The Cambodian tax code contains a number of harsh penalty clauses. A taxpayer is considered negligent under article 125 of the Law on Taxation if the amount of tax paid is less than the amount established by tax provisions by no more than 10%, and if they fail to file a tax declaration or pay tax by the deadline. Taxpayers are considered seriously negligent if the amount of tax paid is less than the determined tax amount by more than 10%.

Despite the difficulties you may experience while starting a business in Cambodia, the country remains attractive because it is one of Southeast Asia’s fastest-growing economies and allows full foreign ownership. Here are some more reasons to start a business in Cambodia: There are seven compelling reasons to start a business in Cambodia.

What are the challenges of starting business in Cambodia?