Things to know before shipping cars and other vehicle parts to Cambodia

Cambodia, a country experiencing remarkable economic growth, has seen a surge in imports, with vehicles and their components occupying a significant position among them. Why? Because as the nation prospers, the demand for efficient and affordable transportation solutions is on the rise. Moreover, with growing income levels, the demand for new cars, specifically, increases further, making Cambodia's vehicle market dynamic and promising.

As a matter of fact, around 54,000 cars are sold annually in Cambodia, but a significant majority of these are imported used vehicles. Amongst these, popular choices include four-wheel-drive vehicles and mid-sized Japanese sedans. 

Given this evolving landscape, understanding the shipping process for cars and vehicle parts is crucial.

Why are cars so expensive in Cambodia?

The high cost of cars in Cambodia is a challenge that stems from a circular problem, creating a complex and never-ending cycle. 

Cambodia's dependency on imports, due to the lack of local manufacturing facilities, drives up car prices. While the Cambodian government has taken steps to establish new vehicle manufacturing plants in the country, aiming to reduce the over-reliance on imports, the potential lowering of car prices will probably only occur in the future. This current absence of local production thus forces the country to still heavily rely on imports to meet the growing demand for automobiles.

In response, many consumers turn to the grey market. Many cars are imported second-hand, often arriving in the country as scrap and then being resold within its borders. Unauthorised dealers operating within this grey market frequently circumvent taxation, such as the 10% Value Added Tax (VAT). This, in turn, puts pressure on the government to enhance tax collection efforts. 

For example, the General Department of Taxation in Cambodia has stepped up efforts in 2023 to ensure compliance with tax obligations. They have initiated the collection of taxes on all means of transportation and vehicles, spanning from June 1 to November 30 2023, to foster transparency and fair competition in the car sales business.

This ongoing cycle underscores the need for individuals and businesses to stay informed about changing regulations and to follow the necessary steps diligently when purchasing or importing cars in Cambodia. 

How to import cars and other automotive parts into Cambodia

Navigating the process of importing cars and automotive parts into Cambodia requires attention to detail and adherence to specific guidelines. After all, international shipping, especially of bulky and irregularly shaped automobile components, demands careful consideration. 

Consider these essential steps to ensure a smooth and compliant importation process for cars, car accessories, and car spare parts into Cambodia.

1. Understand Cambodia’s car import regulations and requirements

Before embarking on the journey of importing cars and automotive parts into Cambodia, it's crucial to understand the country's import regulations and requirements. 

Here are the key steps and considerations:

Customs formalities

Goods imported into Cambodia must go through customs formalities. This process includes the payment of any applicable duties, taxes, fees, and a security deposit. Familiarise yourself with the specific customs requirements based on the nature of your import.

Business registration

Both importers and exporters must register with Cambodia's Department of Business Registration, which operates under the Ministry of Commerce. This registration is a fundamental step in conducting import/export activities in the country.

Taxpayer Identification Number (TIN)

Cambodia employs the Automated System for Customs Data (ASYCUDA), a system developed by the United Nations Conference on Trade and Development (UNCTAD). To participate in this system, importers and exporters need a TIN. Acquiring a TIN involves registering with the General Department of Taxation, part of the Ministry of Economy and Finance.

Customs registration

Furthermore, importers and exporters are obligated to complete their registration with the General Department of Customs and Excise (GDCE). This registration ensures compliance with customs procedures and regulations.

VAT account

Register your VAT account with the General Department of Taxation, which also falls under the Ministry of Economy and Finance. Understanding and fulfilling VAT obligations is crucial for your importation process.

Special Economic Zones (SEZs)

If your business activities are situated within Special Economic Zones (SEZs), like the Phnom Penh SEZ, it is essential to initiate the application process through the Free Zone Management Department under the jurisdiction of the GDCE, headquartered in Phnom Penh. SEZs may have specific regulations and benefits for importers and exporters.

2. Ensure all the required documents are provided