With an average growth rate of around 7% and a growing middle class, automobile ownership is rapidly increasing in Cambodia. In 2017, Cambodia imported more than 50,000 passenger cars and approximately 6,700 heavy trucks. Of those, 80 to 85 percent of imported cars were used vehicles. The United States is the biggest supplier of used cars to Cambodia, with total value of exports reaching $208 million in 2017.
A number of companies sell used and new cars in Phnom Penh. In early January 2013, a private Cambodian company, Heng Development Company, launched an electric car, the Angkor EV 2013, but demand is still very limited.
Automobile sales in Cambodia are predicted to grow at an average annual rate of 16.6 % over the next five years, making it one of the best performing auto markets in ASEAN. New cars are expected to account for an average of 7.6 percent of the country's total car fleet to 2021.
Cambodia allows 100 percent foreign ownership of businesses. However, U.S. companies often choose to work with local partners (agents or distributors) who have experience and knowledge of the local market, rules, and regulations.
Investment incentive programs are available for qualified investors who want to set up their plants in the country. Special economic zones, located in coastal areas like Sihanoukville and at Cambodia’s borders, provide easy access for shipments of materials coming from abroad and neighboring countries such as Thailand and Vietnam. In Cambodia, Korean automobile manufacturer Hyundai has invested in assembly plants from completely knocked-down (CKD) kits in the Koh Kong industrial zone. The Beijing Automotive Industry Corp. (BAIC) and a local company founded Khmer First Car, which is located near Phnom Penh airport and produces light trucks with components imported from China.
Import costs for automobiles (new and used) includes a 35 percent import duty, a 60 to 65 percent special tax, and a 10 percent value-added tax. Total import taxes exceed 100 percent, accounting for more than the market price of cars in developed countries, like the United States.
Sokros Chann
U.S. Embassy Phnom Penh, Cambodia
Cambodia
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Market Entry
Barriers