Cambodia and Europe Push Forward Reform Agenda as Business Climate Dialogue Deepens

At the 4th Cambodia-Europe Public-Private Sector Dialogue, the Cambodian government closed out two long-running disputes and opened four new regulatory fronts, under the watchful eye of EuroCham.

In the middle, Deputy Prime Minister Sun Chanthol

The Council for the Development of Cambodia (CDC) hosted, this Tuesday, a meeting that participants themselves describe as unusually substantive. The 4th Cambodia-Europe Public-Private Sector Dialogue brought together senior officials, European diplomats and business leaders around a packed agenda spanning taxation, trade facilitation, green supply chains, healthcare and regulatory simplification.

The session, opened by Deputy Prime Minister Sun Chanthol, EuroCham Cambodia Chairperson Tassilo Brinzer and European Union Deputy Head of Mission Andreas Berg, quickly took on a tone that longtime observers of the exercise had not previously encountered.

"This 4th Cambodia-EU Public Private Sector Dialogue was probably the strongest in content, discussion, and decision yet," said Tassilo Brinzer, Chairperson of EuroCham Cambodia.

"The CDC team, under the leadership of DPM H.E. Sun Chanthol and H.E. Keo Rottanak, was very efficient and clear in their responses. Some issues will be clarified by the EuroCham team in the coming months, and some can be developed further with line ministries. Overall, we are very happy with the format of the discussion, and the depth of its results."

Two Long-Standing Disputes Resolved

The government used the opening of the talks to announce the resolution of two longstanding issues. The first concerns the legal definition of a "new car," a regulatory grey area long exploited by grey-market importers to the detriment of authorized distributors. Technical alignment between the General Department of Customs and Excise (GDCE) and the Ministry of Commerce has now clarified the applicable criteria.

The second concerns open-lid prize promotions for alcoholic and non-alcoholic beverages. Following sustained EuroCham advocacy — including a formal letter to the Prime Minister in March 2025 — such promotions will be officially prohibited starting October 1, 2026, under Prakas 4528 issued by the Ministry of Economy and Finance. European breweries, which had faced what they considered unfair competition incompatible with their own responsible-consumption policies, welcomed the decision.

Renewable Energy: Halfway There

On the thornier question of Renewable Energy Certificates (RECs), unavailable in Cambodia since 2025 and limiting the ability of European companies to formally report on supply chain decarbonization, the Ministry of Mines and Energy committed to continued discussions on pricing, availability and transitional arrangements toward an internationally recognized REC framework expected later this year. The issue remains classified as partially resolved.

Red Tape: Numbers That Raise Eyebrows

EuroCham's red tape reduction initiative, launched with CDC support following the previous edition of the dialogue, has identified five priority areas for action: Qualified Investment Projects (QIP) and online business registration, sectoral licenses, certificates of origin, commercial exhibition permits, and the now-resolved "Company Secretary" requirement.

One figure stood out in particular: according to EuroCham, 59% of documents required for QIP and business registration are currently requested more than once by different government entities. The CDC committed to working with EuroCham to improve data sharing through digital portals and reduce duplicated document requests.

On trade facilitation, EuroCham's Transport and Logistics Committee raised specific questions on the interoperability of customs platforms and the integration of line ministries into the Cambodia National Single Window (CNSW). Port efficiency at the Autonomous Port of Sihanoukville also remained on the agenda, with follow-up questions on 24-hour customs operations, gate booking system integration, rail incentives and expressway access.

Textiles: A $126 Million Opportunity

Textile recycling occupied a notable place in the discussions. Cambodia's garment sector generates 200,000 tonnes of textile waste annually, but current VAT and import duty obligations make transferring this material to formal recycling facilities commercially unattractive. EuroCham identified a potential solution within the CDC's existing Law on Investment and requested an initial meeting with the relevant QIP department to explore a transfer-of-material mechanism — a reform that could help unlock a $126 million textile recycling market.

"I was pleased to participate in the 4th Cambodia-EU Public-Private Sector Dialogue at the Council for the Development of Cambodia on behalf of EuroCham's Garment & Manufacturing Committee," said Emerald Am, Chairperson of the committee.

"Our discussions highlighted the importance of advancing textile waste recycling and exploring practical solutions for QIP-to-QIP transfers of recyclable materials, following a joint assessment with the General Department of Taxation, the General Department of Customs and Excise, GIZ and the EuroCham team. As Cambodia continues to strengthen its position as a responsible sourcing destination, sustainability and circular economy initiatives will be increasingly important to meeting the expectations of European brands and retailers toward 2030."

Four New Items on the Table

This edition also saw four new issues introduced. EuroCham's Tax and Governance Committee raised the 1% prepayment tax on income, currently calculated on gross turnover rather than actual profitability. The chamber called for shifting the tax base from turnover to pre-tax profit to better reflect business realities and ease pressure on the formal economy, particularly in low-margin sectors.

EuroCham also flagged the absence of a commercial arbitration court accessible to international businesses, while welcoming the Ministry of Justice's initial work on such a mechanism and offering its expertise to help shape it.

The Healthcare Committee, for its part, encouraged the Ministry of Health to formally recognize technical evaluations from Stringent Regulatory Authorities such as the European Medicines Agency (EMA) when registering medicines in Cambodia — a reform that could reduce approval timelines from the current 22–26 months to an estimated 14–16 months.

"Cambodia has a clear opportunity to make pharmaceutical registration smarter, not weaker," said Dr. Elias Engelking, Co-Chairperson of EuroCham's Healthcare Committee.

"When a medicine has already undergone rigorous scientific review by the EMA, US FDA or Japan's PMDA, Cambodia should be able to rely on that trusted assessment while still safeguarding patient safety. This is not about lowering standards. It is about using global regulatory excellence to strengthen Cambodia's own system and focus scarce regulatory capacity where it matters most."

Finally, the Fast-Moving Consumer Goods Committee called for the introduction of a minimum legal purchasing age for alcohol, noting that Cambodia remains the only ASEAN member state without such legislation. The Ministry of Commerce indicated it is reviewing the possibility of a sub-decree setting the minimum age at 18, in line with international standards.

A Dialogue Built on Sincerity

Closing the session, Deputy Prime Minister Sun Chanthol reaffirmed the government's commitment to the process. "We are committed to this sincere dialogue and welcome recommendations from the European business community," he said. "Some issues can be addressed immediately, others will take time, and others will benefit from EuroCham's expertise on international best practices. EuroCham is a strong goodwill ambassador for Cambodia in attracting foreign direct investment, and we will continue working together to strengthen Cambodia's position as a destination for international investment."

Both sides committed to maintaining technical-level engagement on all open items ahead of the 5th edition of the dialogue.