Choosing Your Base in Southeast Asia: A Comparison Between Vietnam, Cambodia, and Indonesia

While global foreign direct investment (FDI) has faced an 11%  downward trend, Southeast Asia has remained remarkably resilient. In 2024, SEA continues to attract major FDIs totalling up to $226 billion. By 2030, FDIs are projected to reach $370 billion in the region. 

Vietnam, Cambodia, and Indonesia are three primary destinations for global investment. Vietnam and Cambodia are mostly known for manufacturing (particularly in garments and textiles) but are shifting away to high-tech and semiconductor industries. Indonesia, on the other hand, sets its eyes on large-scale industrial and service projects. 

In this guide, we are going to compare Vietnam, Indonesia, and Cambodia’s corporate compliance for foreign investment. We will be comparing each country’s incorporation process, requirements to start a company, as well as government incentives to help bolster growth for your business. 

Vietnam: For Electronics, Advanced Manufacturing, & Tech Startups

Vietnam has spent the last decade positioning itself as the primary alternative to China in manufacturing. However, the Vietnamese government has pivoted from general manufacturing to “next-generation” FDIs in technology. This involves bolstering the country’s semiconductor fabrication, renewable energy components, and digital economy infrastructure.

An Overview of Foreign Ownership Regulations in Vietnam

Vietnam follows a “Negative List” approach under the Law on Investment 2020. This means that if a sector is not on the list of restricted or conditional sectors, it is open for 100% foreign equity. Here are sectors that are open, conditional, and restricted in Vietnam:

• Open Sectors: Most manufacturing, IT, and trading (e-commerce) allow 100% foreign ownership.
• Conditional Sectors: Industries like logistics, travel agencies, and telecommunications often have “caps.” For example, some logistics sub-sectors limit foreign ownership to 49% or 51%, requiring a Vietnamese joint venture partner.
• Prohibited: Foreigners are strictly barred from certain sensitive areas like debt collection services and specialized press/media.

Starting an LLC in Vietnam

The most popular business structure for foreign investors is a Limited Liability Company (LLC). Business registration is handled by the Department of Planning and Investment (DPI) within the locale where your business will be located. 

The Investment Law 2025 (Law No. 143/2025/QH15) has made it simpler for foreigners to establish a company in Vietnam. This new law allows foreigners to establish a company without an Investment Registration Certificate (IRC), cutting down the registration process. 

Incorporation can take anywhere from 4 to 8 weeks depending on the complexity of your organisation. Furthermore, there is no minimum paid-up capital to establish a company and investment depends on your business activity. For example, if you register a manufacturing plant with only $5,000, you will likely be rejected by the DPI. 

For more information on setting up an LLC in Vietnam, you can refer to our guide: How to Start a Business in Vietnam as a Foreigner.

Government Initiatives for High-Tech and Green Energy

Vietnam is currently doubling down on “High-Tech” and “Green Energy” as the cornerstones of its future economy. Under Decree 31/2021 and the Law on Investment 2020, the government has established a robust framework of incentives designed to attract high-quality FDI.

Key government initiatives and incentives for foreign investors include:

• Corporate Income Tax (CIT) Holidays: Projects in priority sectors (semiconductors, digital tech, high-value R&D) can qualify for a “4-9-50” scheme: 4 years of 0% tax, followed by 9 years of a 50% reduction in the applicable rate.
• Preferential Tax Rates: Instead of the standard 20%, qualifying projects in high-tech zones or disadvantaged regions can receive a preferential CIT rate of 10% for up to 15 years.
• Import Duty Exemptions: Duty-free import of machinery, equipment, and specialized transport means that constitute fixed assets of the project. This also extends to raw materials and components that cannot yet be produced domestically.
• Land Rent & Land Use Exemptions: Depending on the project’s sector and location, investors may receive exemptions from land rent for 3 to 15 years, or even for the entire project duration in specially encouraged areas.
• Preferential Credit & Subsidies: The government provides low-interest loans for projects focused on the “circular economy,” green manufacturing, and renewable energy.
• R&D and Innovation Support: Direct administrative and financial support for the establishment of R&D centers, including higher deduction rates for R&D expenditures.
• Specialized Investment Support: For exceptionally large projects (over $1.3 billion or $440 million in high-tech), the Prime Minister can approve “Special Incentives” that go beyond standard frameworks.

These measures are designed to not only attract capital but to ensure that new investments contribute to Vietnam’s “Net Zero” commitments by 2050. This makes Vietnam an ideal destination for global enterprises that puts emphasis on their environmental impact and long-term sustainability.

Indonesia: For Companies Who Want to Tap into its Vast Market

Indonesia holds a seat among the world’s 20 largest economies in the world. The country is a member of the G20 – a forum that represents 85% of global GDP and 75% of international trade. Most foreign companies in Indonesia aim to capture the country’s massive high-spending domestic market. 

An Overview of Foreign Ownership Regulations in Indonesia

Like most of its neighbors in Southeast Asia, Indonesia has foreign ownership restrictions governed by the country’s Positive Investment List. Each business activity has an assigned KBLI code that dictates your company’s “risk”, requirements, and foreign equity. 

• Open Sectors: Over 245 “priority” sectors (like wholesale trade and construction) are now 100% open to foreign ownership—a huge shift from previous years.
• Conditional: Some sectors (like sea transportation) still require a local partner and are capped at 49%.
• Prohibited: Certain sectors remain closed to foreigners to protect local SMEs. For example, traditional markets, smaller-scale retail, and some traditional crafts are reserved for Indonesians.

Starting a PT PMA in Indonesia

The primary vehicle for foreign investment in Indonesia is a PT PMA (Perseroan Terbatas Penaman Modal Asing). The country follows a risk-based classification approach for companies: 

Risk Level	Licensing Requirements	Description
Low Risk (LR)	Nomor Induk Berusaha (NIB) only	Minimal oversight for low-impact activities like basic trade.
Medium-Low Risk (MLR)	NIB + Basic Compliance Certification	Light technical verification for simple services.
Medium-High Risk (MHR)	NIB + Standard Certificate (self-declaration)	Self-certification with moderate monitoring for logistics/tech.
High Risk (HR)	NIB + Standard Certificate + Sectoral licenses	Full ministerial approval for high-stakes sectors like health/energy.

As per the latest investment regulation, the minimum paid-up capital has been lowered from IDR 10 billion (~$650,000) to IDR 2.5 billion (~$150,000). To ensure that this capital is used for business development, the new law under Article 27, paragraph 1 states that this capital cannot be transferred out of the company’s account for 12 months after the initial deposit. 

This threshold is specifically designed to ensure that foreign investment targets large-scale industrial or service projects that don’t compete directly with SMEs. This means that a PT PMA is inherently a “large” company from the moment of birth, which carries higher expectations for reporting and tax compliance.

Strategic FDI Incentives & the Downstreaming Policy

President Prabowo’s administration is aggressively pushing the “Downstreaming” (Hilirisasi) policy. The goal is to move Indonesia up the value chain by banning raw material exports and forcing companies to build processing facilities domestically. To sweeten the deal, the government offers a comprehensive suite of initiatives:

• Tiered Tax Holidays: Under MOF Regulation No. 130/2020, “pioneer” industries (like metals, chemicals, and EV batteries) can receive 100% Corporate Income Tax (CIT) relief for 5 to 20 years, depending on the investment value (starting from IDR 500 billion).
• Tax Allowances: For sectors that don’t qualify as “pioneer,” the government offers a 30% reduction in net income over 6 years based on the total investment, along with accelerated depreciation and reduced withholding taxes on dividends.
• Import Duty Exemptions: Investors can import machinery and raw materials for the first two years of production duty-free, provided these items aren’t produced locally.
• Special Economic Zones (SEZs): Setting up in one of Indonesia’s 20+ SEZs (like Batam or Mandalika) unlocks additional benefits, including VAT exemptions on domestic purchases and simplified immigration procedures for foreign workers.
• Super Tax Deductions: Companies investing in vocational training or R&D activities in Indonesia can claim tax deductions of up to 200% and 300%, respectively, of the costs incurred.
• Golden Visa Program: To attract high-net-worth individuals and corporate investors, Indonesia now offers a 5- to 10-year residency permit for those meeting specific investment thresholds, providing much-needed long-term stability for foreign executives.

Cambodia: Fast Entry into Agro-processing, Electronics assembly, and Green Energy

Like Vietnam, Cambodia had always been a manufacturing powerhouse, especially in garments and footwear. However, the Khmer government is moving beyond its reliance on the garment sector to encourage high-value industries in agro-processing, green energy, and digital infrastructure. 

An Overview of Foreign Ownership Regulations in Cambodia

A big draw for FDIs in Cambodia is its liberal foreign equity regulations. Cambodia offers what is known as a “National Treatment” under the Law on Commercial Enterprises (LCE) and the Law on Investment (2021). This means that, by law, a foreign investor is treated exactly the same as a local Cambodian investor in almost every operational sense.

• The 100% Rule: Unlike Vietnam (which has sector caps) or Indonesia (which has high capital barriers), Cambodia allows 100% foreign equity in nearly every sector. You do not need a local partner, you do not need a nominee, and you do not need to “wait” for a specific approval to own the majority of your company.
• No Capital Controls: The Law on Foreign Exchange guarantees that there are no restrictions on the remittance of foreign currencies abroad. Whether it’s principal, interest, or dividends, you can move your money freely through authorized banks.
• Restricted Sectors: Very few sectors (like certain types of professional services like Law or specialized cigarette manufacturing) are reserved exclusively for Cambodians or require prior authorization.

The only major restriction for foreign investors in the country is land ownership. Under the Constitution, only Cambodian citizens or entities (where 51% is owned by Cambodians) can own land. However, the law provides for Long-Term Leases (up to 50 years, renewable) which give foreign investors sufficient security for industrial and commercial projects.

Starting an LLC in Cambodia

Many foreigners in Cambodia establish a Limited Liability Company (LLC). Individuals can also establish their own companies as a Single-member Private LLC. To incorporate your business, you must register your company with the Ministry of Commerce (MoC) and obtain a registration certificate. 

Registration is primarily done online through the CamDX system under the Ministry of Economy and Finance (MEF). To start a company, the minimum paid-up capital is KHR 4 million (~USD 985), making it accessible for startups and single-member LLCs. You also need to pay a centralized registration fee when you register your company (KHR 2,155,000 or ~USD 540). The overall timeline for business registration in Cambodia is around 2-3 weeks but can take longer depending on the complexity of your organization. 

Qualified Investment Project (QIP)

Under the Law on Investment 2021, Cambodia has refined its strategy to court FDIs and diversify their economy outside of garment manufacturing. The center of this strategy is the Qualified Investment Project (QIP) status. If your project qualifies, you unlock a multi-layered regime of incentives categorized as Basic, Additional, and Special.

Special Incentives: For projects with high potential to contribute to national development (like large-scale green energy or high-tech parks), the government can grant Special Incentives set out in the annual Law on Financial Management, which can include even longer tax holidays or deeper deductions.

Summary: Where Should You Start Your Business in Southeast Asia?

While Cambodia offers the path of least resistance for smaller entities, Indonesia targets major institutional players, and Vietnam sits in the middle with a highly regulated project-based approach.

Here is a summary of each country’s minimum paid-up capital, ownership restrictions, and time to incorporate:

Feature	Vietnam (LLC)	Indonesia (PT PMA)	Cambodia (Pte. Ltd.)
Time to Incorporate	4 – 8 Weeks (IRC + ERC)	2 – 4 Weeks (OSS System)	2 – 4 Weeks (Digital Portal)
Min. Paid-Up Capital (Local)	No minimum paid-up capital (Discretionary)	IDR 2.5 billion	KHR 4 million  (Nominal) or USD 1,000
Ownership Restrictions	Caps in Logistics, Telecom, & Media	Priority List: 100% Open for Most	100% Open (Except Land)

Ultimately, the choice where to start a business depends on your industry, scale, and your goals. So, where should you start?

• Vietnam: if your primary goal is export-oriented manufacturing or scaling a high-output software house. The country is designed for these sectors, offering established industrial clusters where suppliers and talent are already concentrated, making it the most efficient “plus-one” alternative to China for those requiring a technical edge.
• Indonesia; if you have significant capital and the strategic patience to navigate a complex regulatory environment in order to secure a dominant position in a G20 economy. This is for the long-term player looking to tap into a domestic middle class of nearly 300 million people that is currently redefining global consumption patterns.
• Cambodia: if you are an SME or a tech founder who needs to move at lightning speed without the friction of local partnership or heavy capital requirements. It offers the rare opportunity to maintain 100% equity control while utilizing a dollarized economy to eliminate exchange-rate risks for your international transactions.

If you are unsure which market to start your business with, you can schedule a free consultation with our local experts. We will provide you with in-depth information and advice where to set up your business. With our services, we can handle the entire incorporation process and licensing on your behalf. 

Tell us where you would like to start your company in the region with a free consultation.