You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

July 8, 2020

Cambodia Offers Additional Assistance to Businesses and Workers Impacted by COVID-19

Subscribe to Updates

In the wake of the COVID-19 pandemic, the Royal Government of Cambodia has introduced new measures to help mitigate the impacts of the pandemic on the country’s businesses and economy. In particular, the new measures introduced in the government’s May 26 press release, Additional Measures to Support the Private Sector and Workers Seriously Impacted by the COVID-19 Pandemic and to Recover and Promote Economic Growth after the End of this Pandemic, support businesses by extending the validity of previous measures and by introducing new provisions to increase access to financing, to allow loan restructuring, and to reduce tax burdens.

Increased Access to Business Finance

To enable businesses to better access financing, the Ministry of Economy and Finance (MEF) has introduced an additional USD 200 million into the Credit Guarantee Fund, which guarantees loans through financial institutions so that enterprises that may have previously faced difficulty accessing loans have the ability to obtain working capital.

The government has also previously provided capital to small businesses through low-interest loans granted by the Agriculture Rural Development Bank (ARDB). Following the pandemic, the ARDB has dropped interest rates on loans for working capital from 6% to 5%, and on loans for investment capital from 6.5% to 5.5%, to help make capital financing more accessible. The maximum term of ARDB investment loans has been shortened to five years (from seven years), and working capital loan terms remain capped at a two-year maximum tenure.

Businesses that have not been officially registered with the government may apply for loans before completing registration so long as they fulfill the registration conditions within one month after obtaining the loan. The government recently launched the online Business Registration Platform to cut registration time to eight days (from three months) by streamlining the registration procedures—previously handled by several ministries, the Tax Department, and the Council for the Development of Cambodia—into a single process.

In addition to the credit guarantee fund and the reduced interest rates on ARDB low-interest loans, the MEF has also prepared additional financing of USD 300 million to promote growth in primary sectors during and after the crisis.

Loan Restructuring and Changes to Co-Financing Scheme Loans

Building off the previous directive to all banks and financial institutions to restructure loans, the government has made adjustments to some requirements and conditions and has also begun allowing restructuring of loans taken out through the Co-Financing Scheme for Small and Medium Sized Enterprises. 

Under this USD 100 million scheme, which was launched this year, SMEs in certain priority sectors can borrow up to USD 200,000 for working capital and up to USD 300,000 for investment capital. The maximum interest rate on these loans is 7% per year, and the repayment period has now been lengthened to seven years (from four).

While originally SMEs could only access the loans if they planned to create job opportunities for at least five people with the loan funding, now SMEs are only required to create new job opportunities (number unspecified) using the loan. Businesses in the medical device and pharmaceutical sectors may also be eligible for the loans in addition to the priority sectors outlined in Sub-Decree No. 124 S.E., dated October 2, 2018, on Tax Incentives for Small and Medium Enterprises in Priority Sectors.

In allowing restructuring of loans that had been taken out through this program, repayment schedules for qualifying loans may be changed from monthly to quarterly or semiannual repayments.

Reducing Tax Burden

The government’s measures to reduce the tax burden on many businesses include various tax reductions, waivers, and exemptions. The withholding tax on new loans from foreign and domestic sources has been reduced to 5% for 2020 and 10% for 2021, with the normal rate of 14% resuming in 2022. For existing loans, the withholding tax has been reduced to 10% for 2020, with the normal rate resuming in 2021. In addition, the government has continued tax exemptions for all monthly taxes paid by hotels, guesthouses, and travel agencies, as well as for tourism license renewal fees for 2021. In addition, tourism enterprises that have been unable to resume operations will continue to be exempt from making monthly contributions to the National Social Security Fund. All airlines registered in Cambodia will be exempt from their obligation to pay a minimum tax and prepayment tax on income for the duration of two more months (June–July 2020).

Additional Social Support Measures

Finally, the government has granted an extension of the cash-for-work program, which provides cash-based compensation for short-term labor projects in target areas, through 2020. The government has also introduced a social protection program to support the daily livelihoods of poor and vulnerable families across the country.

Related Professionals
Cassandra Allen
Email

Practices

Banking and Finance

Corporate/M&A

Employment

Tax

Location

RELATED INSIGHTS​ 

January 30, 2025
The Thai cabinet has approved a draft amendment of the Emergency Decree on Measures for the Prevention and Suppression of Technological Crimes as proposed by the Ministry of Digital Economy and Society to strengthen measures against technological crimes, particularly targeting call center scams and cyber fraud. Following the Council of State’s review, the emergency decree will be become effective immediately upon its enactment and publication in the Government Gazette. While the draft amendment is not yet publicly available, the government recently indicated that the emergency decree aims to empower authorities with decisive measures to combat cybercrime effectively. It underscores the shared responsibility among various sectors, including banking, telecommunications, and online platforms, in safeguarding against technological crimes. Key provisions of the draft amendment of the emergency decree include: Telecommunications provider obligations: Telecommunications service providers must suspend SIM cards associated with criminal activities. The National Broadcasting and Telecommunications Commission and mobile service providers themselves are authorized to temporarily suspend mobile phone numbers if there is reasonable suspicion of involvement in criminal activities. Banking responsibilities: Financial institutions are required to promptly report mule accounts to the Anti-Money Laundering Office to facilitate quick restitution to victims. The Anti-Money Laundering Transaction Committee is empowered to order the return of funds to victims without requiring a final court ruling. Penalties for noncompliance: The amended emergency decree introduces penalties for noncompliance by regulated entities that fail to prevent criminal activities for offenses related to technology crimes in the following cases: Digital asset services: Those engaged in the buying, selling, or exchanging of digital assets, such as cryptocurrencies and digital tokens, as well as digital asset businesses that launder money obtained from online crimes by converting it into digital currency, will be subject to imprisonment for up to one year, a fine of up to THB 100,000,
Read More
January 22, 2025
Tasked with implementing the Politburo’s policy outlined in Notice No. 47-TB/TW dated November 15, 2024, the prime minister of Vietnam issued Decision No. 1718/QD-TTg on December 31, 2024, appointing himself as the head of a steering committee dedicated to the establishment of an international financial center in Ho Chi Minh City and a regional financial center in Da Nang by 2025. The Ministry of Planning and Investment has subsequently drafted an outline for the National Assembly’s Resolution on the Establishment of Regional and International Financial Centers in Vietnam (“Draft Resolution”). This Draft Resolution introduces two key policy groups: (i) policies governing the quantity, location, structure, organization, functions, and responsibilities of the financial centers; and (ii) policies applicable to various areas and matters within the financial centers. Notably, under the Draft Resolution, fintech has been identified as a key sector, with a specific focus on the implementation of a “controlled sandbox” policy for business models involving virtual assets and cryptocurrencies. Under this framework, transactions related to virtual assets and cryptocurrencies will be permitted from July 1, 2026, subject to licensing, management, impact assessment, and risk oversight by the financial centers’ Management and Operations Committee. Scope of Application and Key Principles The Draft Resolution applies to a wide range of stakeholders, including investors, regulatory agencies, organizations, and individuals involved in the establishment, organization, and operation of regional and international financial centers in Vietnam. These financial centers will have clearly defined geographical boundaries and specific locations, which will be further specified and detailed by the People’s Committees of Ho Chi Minh City and Da Nang. Companies successfully registered as members of these financial centers will benefit from special investor-friendly policy principles, which may differ from the general legal and regulatory framework applicable in other parts of Vietnam. Most notably, the state will
Read More
January 16, 2025
On January 13, 2025, Thailand’s cabinet approved in principle the draft Entertainment Complex Act, as proposed by the Ministry of Finance. This landmark legislative proposal, which would allow casinos as part of larger “entertainment complexes,” will now proceed through further parliamentary review and approval. Key provisions of the draft act are described below. Corporate structure: Entertainment complexes must be operated by Thai-registered limited companies or public limited companies with a minimum paid-up capital of THB 10 billion. Directors of the licensed entity must be individuals and have the qualifications and none of the prohibited characteristics specified in the draft act. The draft act does not impose restrictions on foreign-majority ownership structures; however, it is worth monitoring whether any amendments addressing this matter are introduced during the legislative process. Operating conditions: Each entertainment complex must be located in an area designated under a royal decree. It must also include at least four types of entertainment businesses listed in the annex to the draft act (e.g., shopping mall, hotel, sports stadium, amusement park), along with a casino. The allocation of casino space must comply with regulations to be specified at a later date. Licensing conditions: Licenses will be valid for 30 years, renewable in increments of up to 10 years. The license issuance fee is THB 5 billion, the annual fee is THB 1 billion, and the renewal fee is THB 5 billion. The Entertainment Complex Policy Committee, chaired by the prime minister, will review and approve applications. Online gambling restrictions: Licensees are prohibited from offering gambling through internet-connected systems or electronic devices that allow access from outside the casino premises. Labor requirements: Thai and foreign employee ratios must adhere to prescribed regulations. Land privileges: Lease agreements for land use are limited to 50 years. Renewal is permitted for up to
Read More
January 15, 2025
Myanmar’s Directorate of Investment and Company Administration (DICA) has issued new documentation requirements for Myanmar-registered companies making changes to their shares or directors. Effective January 8, 2025, the DICA will only approve such changes when accompanied by specific supporting evidence as required under the Myanmar Companies Law 2017 (MCL). Key Changes and Requirements For share transfers, companies must submit the required application form, along with the following documents: Resolution from the company’s board of directors approving the change of shares or share transfer. Copy of the share-transfer agreement signed by both parties, with proof of stamp duty payment. For director changes, companies must submit the required application form, along with the following documents: Copy of new director’s ID or passport. Shareholder resolution approving the change of the director(s). New director’s consent to act (for appointments) or signed resignation (for departures) In addition to announcing the new documentation requirements, the DICA also reminded companies of an April 2023 announcement that requires companies to submit certain other required documentation within two months of establishment to the DICA by email. Next Steps Companies planning share transfers or director changes must ensure they prepare the complete documentation package before submission to the DICA. For more information on this announcement or assistance with corporate secretarial matters, please contact Tilleke & Gibbins at [email protected].
Read More