23 ECONOMIC OVERVIEW The economy of Cambodia at present follows an open market system (market economy) and has seen rapid economic progress in the last decade. Cambodia’s two largest industries are textiles and tourism, while agricultural activities remain the main source of income for many Cambodians living in rural areas. The service sector is heavily concentrated on trading activities and catering-related services. Cambodia has since had one of the best economic records in Asia, with economic growth averaging 6 percent for the last 10 years. Strong textile, agriculture, construction, garment and tourism sectors have led to foreign investments and international trade. From 2004 to 2007, the economy of Cambodia grew about 10% per year, driven largely by an expansion in the garment sector, construction, agriculture, and tourism. Growth dropped to below 7% in 2008 as a result of the global economic slowdown. In 2013 the Gross Domestic Product (GDP) in Cambodia grew by 6.0 percent from the previous year. Japan, China and South Korea are the three main investors in Cambodia. China is Cambodia’s biggest source of foreign direct investment. The Government of Cambodia offers a wide range of investment incentives to encourage business growth, job creation and to make investments in the country easy, attractive and worthwhile, such as 20% corporate tax, tax holidays, full import duty exemption, reinvestment of earning (special depreciation) etc. The Investment Law and sub-decree contains a number of important guarantees for the investors: • Equal treatment of all investors; • No requirement of local equity participation; • No price controls on products or services; • No restriction on forex convertibility; • Free remittance of foreign currencies abroad. Bilateral agreements on the promotion and protection of investments between the Kingdom of Cambodia and 24 countries exist including such countries as China, Germany, Indonesia, and both Koreas, Malaysia, Philippine, Singapore, Thailand, USA, Vietnam, Japan and other countries. Among the most meaningful investors in Cambodia the first place is taken by China with US $ 16,270 million, then follows Korea with US $ 4,327 million, EU US $ 3,685 million, Malaysia US $ 2,614 million, USA and Vietnam with more than US $ 1,280 million each. Tourism is an encouraged investment activity. Among the approved investments by sector from 1994 – 2012 tourism received up to 48%. Cambodia is taking advantage of a fast developing tourism sector with foreign arrivals exceeding 4.2 million per year in 2013. In 2013, Cambodia’s tourism sector is expected to have generated US$2.4 billion in receipts, which made up approximately 15% of the country ’s GDP. From 2004 to 2007, the economy of Cambodia grew by about 10% per year, driven largely by an expansion in the garment sector, construction, agriculture, and tourism. Growth dropped to below 7% in 2008 as a result of the global economic slowdown.