Aside from setting up a private limited company, foreign investors have two other options for entering the Cambodian market – a Branch Office or a Representative Office. Both are registered through the Ministry of Commerce, through similar procedures, and cost about the same in official fees.
So what’s the difference?
Branches are allowed to conduct a much broader range of activity than representative offices. Branches can buy and sell goods, sign contracts, build things, render services, and generally everything that a regular Khmer business can do.
A representative office, on the other hand, cannot regularly buy and sell goods or offer services. As its name says, a representative office represents its foreign parent in Cambodia. So for example, the office can contact customers and enter into contracts on behalf of its foreign parent, but can’t sell the goods itself. A representative office is a more tentative step into the Cambodian market, often used by investors to test the waters or for promotional purposes when the business distributes its goods by other means.
Here is how the Law on Commercial Enterprises (2005) treats the matter:
Article 274: Authorized activities [Representative Office]
A commercial representative office or commercial relations office may perform the following acts in the Kingdom of Cambodia:
(a) Contact customers for the purpose of introducing customers to its principal.
(b) Research commercial information and provide the information to its principal.
(c) Conduct market research.
(d) Market goods at trade fairs, and exhibit samples and goods in its office or at trade fairs.
(e) Purchase and keep a quantity of goods for the purpose of trade fairs.
(f) Rent an office and employ local staff.
(g) Enter into contracts with local customers on behalf of its principal.
However, a commercial representative office or commercial relations office may not regularly buy or sell goods, perform services, or engage in manufacturing, processing or construction.
Article 278: Authorized activities [Branch Office]
A branch may perform the same acts as a commercial representative office.
In addition, a branch may regularly buy and sell goods and services and engage in
manufacturing, processing and construction same as the local company except any acts that prohibited for natural or legal person who is foreigner.
For more on establishing a business in Cambodia, see our publication.